
TRUST AND COMPANY
MANAGEMENT
Trust and Company management has been a traditional
business for Gibraltar. The sector is made
up of a mix of professional accountancy
and legal firms, firms providing a variety
of financial services business, and pure
company management practitioners. Gibraltar
has a well-developed legal and financial
infrastructure for trust and company management.
With a large established base of trusts,
and a growing reliance on corporate work,
the volume of trust and corporate litigation
is becoming significant. The sector continues
to grow at a steady rate.
This is an important sector in the overall
structure of the finance centre and therefore
it is paramount that the standards and procedures
adhered to by those involved are synonymous
with the quality and professionalism associated
with the provision of financial services
in Gibraltar.

INSURANCE
The number of Insurance companies continues
to grow, making this the biggest growth
area in Gibraltar’s finance centre.
At present, there are 51 companies licensed
under the Insurance Companies Ordinance
1987 to carry on insurance business in
Gibraltar. The number has doubled since
2002 and very nearly quadrupled since 1999.
Employment in the insurance industry grew
by 42 persons in the year to March 2005.
Gibraltar has fully implemented EU insurance
directives, and under the ‘common passport’
rules, Gibraltar insurance companies can
therefore write business into the EU without
needing to establish a presence in the jurisdiction
concerned.
Gibraltar captives can write business anywhere
within the EU, and there is provision for
both protected for both protected cell companies
and rent-a-captives.

COMMERCIAL TRADING
COMPANIES, BETTING AND E-COMMERCE INDUSTRY
Gibraltar has always attracted certain types
of trading operation, whereby a Gibraltar
company can reap some or all of the profits
generated by trades taking place elsewhere.
The management of trading operations often
generates administrative or sales or customer-handling
jobs, and the Government of Gibraltar offers
incentives to attract such companies.
Gibraltar also has an unusually sophisticated
telecommunications environment, which is
vital in setting up e-commerce operations.
As a result of this Gibraltar currently homes
a flourishing Gaming and E-commerce industry.
It is to be expected that other industries
will follow betting and gambling in establishing
sales, marketing and service operations offshore
to take advantage of the e-commerce possibilities
in low tax jurisdictions.
Over the last decade, Gibraltar has witnessed
a dramatic growth in its gaming industry.
The last three to four years in particular
has seen the establishment of major casino
operators.

GAMING INDUSTRY
In particular, operations based in territories
which housed embryonic start ups have viewed
Gibraltar as one of a number of more established
centres to which to migrate their gaming
activities. Significantly, 888.com and
PartyGaming chose Gibraltar as their jurisdiction
for the establishment of a European base.
The rapid growth of both groups from Gibraltar
has consolidated the importance of the
industry in Gibraltar and created further
significant employment locally and a platform
for public listing on the London Stock
Exchange.
Gibraltar
gaming companies have recently been making
headlines. PartyGaming Plc and 888 Holdings
Plc have in particular attracted a great
deal of attention as each has successfully
floated on the London Stock Exchange. These
represent the first time Gibraltar based
businesses have been listed on a major exchange.
It is likely that these moves will see other
groups identify Gibraltar as a convenient
base from which to develop floatation plans.

HIGH NET WORTH INDIVIDUALS
Individuals with substantial assets and/or
income who wish to enjoy the benefits of
a beneficial tax environment may not avail
themselves of the Qualifying (Category
2) Individual Rules 2004 (the Rules) and
take advantage of these by establishing
their tax residence in Gibraltar. This
should facilitate an individual’s
tax planning and may be useful in limiting
tax liability in other jurisdictions on
world-wide income.
Under the Rules, individuals in possession
of a Qualifying Certificate are liable to
tax only on the first £50,000 of assessable
income. Under the rates of tax currently
enforced in Gibraltar, the maximum liability
to tax for such individuals would be approximately
£20,000 per annum. There is, however,
a minimum tax of £14,000 per annum,
payable irrespective of the individual’s
income in that year of assessment.
Under the sliding rates of tax imposed on
an individual’s assessment income,
receipt in Gibraltar of an amount greater
than £36,000 per annum would expose
an individual to an amount of tax greater
than the minimum sum of £14,000 per
annum, but always subject to the maximum
amount outlined above.
Only individuals not currently resident in
Gibraltar and who have not been resident
in any of the previous five years of assessment
may apply for a Qualifying Certificate.
In order to be successful, the Applicant
must have, for the exclusive use of himself
and his family, approved residential accommodation
in Gibraltar. The Finance Centre Director
may decide whether or not a property is an
approved property. There are various modern,
high quality developments in Gibraltar, which
would be suitable as an approved property,
as well as other properties located in and
around the town centre.
Notwithstanding the residential status acquired
by an individual who has obtained a Qualifying
Certificate, such individual may make use
of tax structures to assist in the planning
of fiscal affairs. These tax structures are
usually only available to non-residents of
Gibraltar. Therefore, the use of a Gibraltar
exempt company or a Gibraltar trust, neither
of which (under certain conditions) are subject
to taxation, may be available to such individuals.
These possibilities together with the fact
that there is no capital gains tax, inheritance
tax or estate duty in Gibraltar make the
jurisdiction an attractive proposition to
individuals able to fulfil the criteria required.

STOCK EXCHANGE
Legislation to allow the setting up of GibEx,
as the exchange will be known, is currently
being drafted, and the bourse, which initially
is expected to handle between 200 and 300
companies and funds – the level at
which it will be economically viable – could
be up and running by March next year.
The Rock’s modern communications network
and the availability of local high-tech expertise
will allow the exchange to use state-of-the-art
technology from the outset, creating a bourse
as sophisticated as any, according to Dr.
Alexander Gancz, commissioner of the Vienna
Stock Exchange for the past 30 years.
Hassans, which was instrumental in bringing
some of the major internet gaming companies
to Gibraltar, has played a major role in
the Rock’s continued economic growth –
not only in terms of the international clients
it has attracted, but in drafting legislation
for the territory’s banking, insurance
and investment services – all significant
developments in terms of Gibraltar’s
ability to “passport” such services
into the EU. Currently Senior Partner Levy
(of Hassans) and his team are drafting the
legislation relating to the establishment
of the new exchange.
If, as seems likely, the project does take
shape – and most things the indomitable
James Levy, QC, throws his weight behind
do
– it will bring Gibraltar into line
with most other financial services oriented
jurisdictions. Several of the smaller international
financial centres have established reasonably
successful stock exchanges, while both Malta
and Cyprus have flourishing burses.
Bank Medici chairman Sonja Kohn, who is also
actively involved in the GibEX, believes
that it could attract listings not only of
some of the international firms which already
have a presence on the Rock but also those
companies in China, India and South America
which seek European investors. It could also
encourage some of Gibraltar’s bigger
firms to seek local listing.

GIBRALTAR EXPERIENCED
INVESTOR FUNDS
]The unique attraction of Gibraltar as a
dependant territory of the United Kingdom
and thus a full member of the European
Union under section 227(4) of the Treaty
of Rome 1973 is significant. This manifests
itself in the recognition and development
of Gibraltar as a quality and reputable
jurisdiction in respect of financial services
business. At the cornerstone of this progressive
development, is the expedient evolution
of a strong legal framework. This is evident
in the transposition of most if not all
EU Directives, including consolidation
and extension of the Criminal Justice Ordinance
1995 being the primary legislation to combat
money laundering in the financial services
sector.
The Financial Services Commission as the
statutory body corporate is responsible for
regulating the four main markets of the financial
services sector which are banking, insurance,
investment services and company and trust
management. Indeed, along with tourism and
shipping, the financial services industry
is now regarded as forming the third pillar
of the Gibraltar economy. Apart from a robust
regulatory regime, a multitude or factors
such as low taxation, quick and efficient
regulation and the recognition of passporting
rights which allows Gibraltar registered
investment companies to do business throughout
the EU without further authorisation of the
industry to the offshore investor.
An area which has witnessed steady growth
in recent years is fund management encompassed
in the investment services sector of the
industry. Funds are a very creative form
of investment which has captured the imagination
of investors. There is a wide cross-section
of funds which can be tailor-made to meet
the profile of investors within the Fund.
This may be exemplified in the jurisdictional
approach where, generally, BVI, the Cayman
Islands or Bahamas may be the preferred choice
of domicile of the Fund due to their relatively
lower level of regulation. In conjunction
to the jurisdictional issues, the type of
fund vehicle may range from the unit trust
or open-ended investment company to the closed-ended
investment company.
Of particular significance in relation to
the private fund, The Financial Services
(Experienced Investor Funds) Regulations
2005 (“the Regulations”) made
under Section 52 of the Financial Services
(Collective Investment schemes) Ordinance
2005, creates experienced investor funds
(“EIFs”) provided notification
is sought within 14 days of its establishment.
EIFs can be set up as Gibraltar-domiciled
companies, unit trusts or Gibraltar protected
cell companies. These are funds designed
for the professional, sophisticated or experienced
investors as prescribed under the Regulations.
In particular, investors in these funds must
have a net worth (or joint net worth with
that person’s spouse) excluding the
investor’s principal place of residence,
greater than Euro 1,000,000 or invest a minimum
Euros 100,000. Notification is sought by
the Administrator of the fund accompanied
by a copy of the funds’ offering documents,
an opinion from a lawyer of at least 5 years’
professional standing that the fund complies
with the relevant legislation and the prescribed
fee. Part III of the Regulations comprehensively
sets out the information which must be included
in the offer document.
EIFs must have an Administrator with physical
presence and staff in Gibraltar and at least
two Gibraltar resident Directors. There must
also be an independent depositary or, in
the case of hedge funds, a prime broker.
The EIF must also have at least two authorised
Gibraltar resident Directors and unit trusts
must have at least one Gibraltar resident
Trustee. EIFs must produce annual audited
accounts.
Gibraltar licensed funds, including EIFs
are exempt from payment of Gibraltar income
and corporation taxes upon receipt of a certificate
from the Commissioner of Income Tax which
is obtained upon application once he is satisfied
that the Fund meets the prescribed criteria.
No death duties, capital gains tax, gift,
wealth, inheritance, or capital transfer
taxes are levied in Gibraltar. There is an
element of nominal stamp duty levied on the
issue of the shares. Funds are not required
to withhold tax from any distribution of
income or capital gains made to their shareholders.
Gibraltar also forms part of a niche jurisdiction
with the implementation of protected cell
company legislation. The shareholding is
broken into different cells and although
occasionally these may overlap, each cell
is used for a different portfolio of business
with the assets and liabilities of each ring
fenced from the others in terms of any claims
or profits which may accrue or be made against
it. Such structure can be particularly beneficial
in an umbrella structured fund to ensure
segregation of the sub-funds. These umbrella
structured funds can be used by separate
clients or by a sole client wishing to promote
several investment strategies.
In conclusion, Gibraltar has been described
as a small but mainstream international
financial centre. The financial services
market is constantly evolving with market
demands, in particular given that wealth
is being created more rapidly than at any
time in the world’s history. Hence
the business of providing for the financial
needs of the wealthiest individuals is
changing dramatically as well. Gibraltar
provides a well regulated and disciplined
regulatory regime that has maintained an
ability to be open-minded and flexible.
Coupled with the aspiration to accommodate
the requirements of investors, makes Gibraltar
a highly attractive location for fund business.
The industry is therefore, very confident
in Gibraltar’s future in the fund
market.