Investors and startups are increasingly drawn to Gibraltar due to its stable economic environment, transparent legal framework, and the government’s commitment to adopting a secure investment climate. This has led to a surge in foreign investments, making the nation an attractive hub for those seeking profitable financial ventures.
GIBRALTAR FUNDS AND INVESTMENTS SPOTLIGHT
Agile, attractive, and acclaimed, Gibraltar is a leading jurisdiction in funds and investments.
A British Overseas Territory, the nation is located below Spain at the southern edge of the Iberian Peninsula. Along with fantastic Mediterranean weather, Gibraltar benefits from a favourable tax regime which can be valuable for business or personal enterprises.
Whether considering moving to the peninsula, establishing residency, or starting a company headquartered in the territory, there can be many key advantages. For instance, in Gibraltar there is no capital gains, investment income, or inheritance tax. Additionally, it is regulated to both UK and EU standards and has high-quality infrastructure.
Whilst no planning can ever totally eradicate the payment of tax, Gibraltar’s financial system has been modernised in recent years to provide a wide range of corporate and individual tax planning opportunities.
Meanwhile, central to the territory’s position as a thriving funds domicile is its flexible yet robust fund regulations that are internationally recognised and conform to the EU’s Anti-Money Laundering Directive (AMLD), as well as Organisation for Economic Co-operation and Development (OECD) conventions.
This is further complemented by Gibraltar’s stable political climate, quality infrastructure, European time zone, professionally trained workforce, and ability to identify and regulate emerging markets early on.
Gibraltar Funds and Investments Association (GFIA) is a non-profit organisation that was formed in 1996 as the Gibraltar Association of Stockbrokers and Investment Managers (GASIM), before being renamed in 2009 to include fund managers.
Today, GFIA’s membership comprises stockbrokers, law firms, banks, audit firms, investment managers, fund managers, administrators, and individuals more broadly involved in the financial sector of Gibraltar.
All members of GFIA are licensed by the Gibraltar Financial Services Commission (GFSC) and are rigorously compliant with local regulations enforced by regulatory bodies.
Thanks to its executives, coordinators, and members, GFIA is an extremely proactive and vibrant association with a unique ability to bring together competitors to achieve the best possible outcome for the industry and jurisdiction as a whole.
The overarching objective of GFIA is to develop and maintain Gibraltar as a specialised investments jurisdiction of choice within Europe, as it strives to promote the territory as one of Europe’s most prominent financial centres.
The association promotes this through rigorous cooperation and liaising with local government and regulatory bodies to maintain Gibraltar as a competitive jurisdiction for funds and investments.
In this way, GFIA makes a strong effort to identify and promote learning opportunities through regular training, which is important for the development and growth of the local workforce. The association also makes a concerted effort to inform and advise its membership of changing and relevant issues affecting the financial industry locally as well as globally, which often involves participation in seminars and conferences throughout the European investment community.
GFIA represents its industry through regular dialogue with its members and cooperation and advocacy with the Government of Gibraltar and GFSC. It also strives to promote its members’ adherence to the principals of investor protection, corporate governance, compliance, and professionalism in investment and fund activities.
A strong partnership between GFIA, GFSC, and the Government of Gibraltar allows the jurisdiction to deal with a multitude of issues in a timely and effective manner that is unlikely to be matched in a larger jurisdiction.
The advent of Brexit, for example, provided a swift response for Gibraltar’s dual regime which gives the nation’s funds and fund managers the option of opting out of the Alternative Investment Fund Managers Directive (AIFMD) requirements.
This means that Gibraltar can attract the same fund clients from the Channel Islands or Caribbean jurisdictions for investment opportunities. On the other hand, the territory distinguishes itself in being the only jurisdiction with “reciprocal access” to the UK.
This means that Gibraltar financial services firms, including fund and asset managers, banks, and insurance companies, can market to and serve clients within the UK on the basis of their Gibraltar licence. Likewise, British firms can serve Gibraltarian clients on the basis of their British licence.
IMPACTS OF BREXIT
On 23rd June 2016, the UK voted to leave the EU.
Although 96 percent of the Gibraltarian electorate voted to remain, this was subsumed into the general result. Consequently, on 31st January 2020, Gibraltar, by default, joined the UK in its withdrawal from the EU.
In the following years, the UK and Gibraltar navigated their way through a transition period and were required to apply and observe EU law in accordance with the new status under the EU Treaties.
In preparation for a post-Brexit world, the territory adopted a dual regulatory regime for its funds sector. AIFMD provisions remain in place, but funds and managers may ‘opt out’ of these requirements.
Therefore, Gibraltar is able to attract funds that do not require the AIFMD passport and its increased regulation and cost for their marketing needs. The nation will also maintain its position as the only jurisdiction in Europe to allow for the launch of experienced investor funds of all sizes without having to wait for regulatory approval.
GFIA firmly believes that the ongoing fallout from Brexit will have a negligible impact on Gibraltar’s fund industry and could even improve the nation’s prevalence in the international arena.
Often referred to as the ‘Brexit silver lining’, Gibraltar‘s bilateral relationship with the UK, which allowed its financial services firms to do business in the country and for UK firms to serve Gibraltarian clients, is unrelated to the EU and will therefore survive the continuing after-effects of Brexit.
Furthermore, Gibraltar distinguishes itself in being the only jurisdiction with “reciprocal access” to the UK, meaning that financial services firms, including fund and asset managers, banks, and insurance companies, can market to and serve clients within the UK using their Gibraltar license. Likewise, British firms can serve Gibraltarian clients on the basis of their British license.
EMBRACING THE WORLD OF CRYPTO
Notably, since Gibraltar’s distributed ledger technology (DLT) regulatory framework came into effect in January 2018, the nation has seen an emerging demand for setting up crypto funds.
Due to the specific required considerations for managing crypto assets, GFIA recommends that all crypto funds dealing with third-party money should be regulated as experienced investor funds (EIFs), however, a crypto private fund may be used in certain circumstances.
GFIA has issued specific standards in the structure of crypto funds, corporate governance, risk management, valuation, custody, safekeeping, and security, as well as a host of other important touchpoints.
This has been achieved through a specific addendum to the Corporate Governance Code for Collective Investment Schemes, which has been in place since 2013 and was originally issued to formalise and codify the existing best practices for collective investment schemes and their directors.
In summary, Gibraltar has a well-regulated financial sector. Its authorities are greatly focused on protecting the reputation and integrity of the nation as a financial centre and cognisant of the importance of adopting and applying international regulatory standards and best supervisory practices.
GIBRALTAR FUNDS AND INVESTMENTS ASSOCIATION PARTNER
