Gibraltar: The Fund Jurisdiction
Well positioned in the Global Financial Centres Index 2008 (GFCI) prepared by the City of London, Gibraltar confirms it is a serious contender for anyone considering establishing a fund.
The Financial Services Commission (FSC) established in 1989 enforces legislation which protects the public from any financial loss and demonstrates Gibraltar’s willingness to comply with regulation, implement international anti-money laundering rules and regulations and monitor those providing such services. The extent of the FSC’s diligence is evident in the International Monetary Fund (IMF) evaluation on supervision of Banking, Insurance and Anti-Money Laundering measures which was produced recently after a visit by the IMF.
When considering the various jurisdictions possible to establish a fund, whether this is an Experienced Investor Fund (EIF) or Protected Cell Company (PCC)/Umbrella Fund, there are a number of factors worth taking into consideration.
Taxation
Gibraltar’s tax regime provides fiscal advantages to both the investment vehicle and investor. Generally speaking collective investment schemes are exempt from tax on their investment income. In addition, any dividends paid are free from any withholding tax in Gibraltar so long as payment is made to a non-resident company or individual. Gibraltar also has no inheritance tax, capital gains tax or wealth tax. Stamp duty is payable on the initial share capital or on subsequent increases at a fixed rate of £10.
European Parent Subsidiary Directive (EPSD)
Gibraltar, as a member of the European Union, benefits from the EPSD which was designed to simplify and remove onerous taxes where a company establishes a subsidiary in another member state. This directive waives withholding taxes between parent and subsidiary where the parent company holds a minimum stake of its subsidiary for a predetermined period of time.
Passporting
Another advantage Gibraltar offers is that of passporting into Europe as long as the fund has met all requirements set out by the FSC and is duly licensed to do so.
Ease of Setup and Flexibility
The process for establishing an EIF is quite straight forward and can, where all documentation has been supplied, be achieved within a short period of time. The main factor behind the speed of which an EIF can be established is due to the application process. It is possible to ‘fast track’ an EIF application as a system of self-certification has been introduced. The result is that of automatic qualification once notification has been received by the FSC confirming the Fund has been launched within 14 days. Notification requirements require the completion of a checklist confirming all legislation and requirements have been met, including the appointment of two Gibraltar Directors authorised to and duly licensed by the FSC, appointment of a Custodian or Broker (required only where the Fund is open ended) together with the appointment of a Gibraltar licensed and regulated Fund Administrator such as Fiduciary Fund Administration Limited. In order to achieve automatic qualification the above mentioned requirements must be confirmed by an established local lawyer. Where a Fund has already been established in another jurisdiction it is possible to re-domicile it to Gibraltar.
Types of Establishment
It is possible to establish a registered EIF in a number of ways, such as;
• A company under the Companies Act
• Protected Cell Company
• Unit Trust
Location and infrastructure
Sitting at the southern tip of the Iberian Peninsula, Gibraltar is ideally positioned for investors resident within the EU. With modern communication facilities, an international airport with regular flights to London, Manchester and Madrid, together with skilled professionals, Gibraltar is ideally placed and well equipped for the long term future.
Gibraltar’s reputation is further endorsed by the presence of well known international banks, accountancy firms and other professional service providers.
Law
Gibraltar’s law is based on the UK’s with some local variation. Its highest court is the Privy Council in the UK and therefore based on laws that are tried and tested.
Gibraltar has come a long way since its offshore tax haven days. Today it is a highly regulated, internationally recognised Finance Centre within the EU, offering sound and competitive Fund Solutions.