Viva Gibraltar – lifting the lid on the Rock

Nicola Smith is CEO of Helvetic Fund Administration Limited, Gibraltar

Since 2008 Gibraltar has been listed in the Global Financial Centres Index published by the City of London Corporation increasing its reputation as an attractive location for business in a variety of areas.

An obvious choice for funds and fund managers

Gibraltar offers a well-established fund regime based on UK legislation and is the only British overseas territory that is part of the European Union (EU) and applies European laws. Fund legislation in Gibraltar was drafted in close consultation with key members of the industry and has resulted in a comprehensible regime that most European based managers and compliance teams find easy to adhere to.

Investment manager licence

A fund manager may set up operations in Gibraltar as either a licensed MiFID (Markets in Financial Instruments Directive) EU investment manager, a licensed AIFM (Alternative Investment Fund Manager Directive) EU investment manager or a licensed UCITS (Undertaking for Collective Investment in Transferable Securities) compliant manager. Once obtained, the manager would be regulated by the FSC and have a fully transferable licence to passport the licensed services throughout the EU.

If a manager does not want to obtain a full AIFM licence but does want to continue to be able to market its services under a MiFID licence, then Gibraltar service providers can offer a platform solution whereby the portfolio management is outsourced to the MiFID manager by a fully and regulated AIFM manager established by the service provider for this purpose.

Service providers

Gibraltar has been servicing the finance sector for many years. There are numerous long established banks, law firms, tax advisers, insurance companies, custodians, auditors and fund administration companies which have a wealth of knowledge to offer to clients.

The focus of Gibraltar service providers has always been to offer a personal tailor-made service to each client. As a smaller jurisdiction, the service providers are more flexible and value each client and their requirements as unique, striving to provide a service which in a larger jurisdiction would simply not be available.

Where in the world

Gibraltar is one of only four EU based jurisdictions where a fund can be domiciled in a tax efficient way. Historically, people have established funds in Dublin and Luxembourg as an onshore location due to their advantageous tax regimes, however in recent years, a saturation of funds on the market and cost issues have paved the way for alternatives such as Gibraltar and Malta to offer investors additional options.

The client should be confident that the parties involved in the development of its fund will work together to ensure that any counterparties who go on to work together post-launch appreciate the needs of the fund’s manager, so tailoring their work accordingly. It is not the case that the set up of the fund is seen as a distinct and separate matter from the ongoing operation after launch.

Redomiciliation and relocation

As an increasing number of regulations are being introduced worldwide, the focus for managers and the funds they manage has moved towards ensuring their operations are domiciled and regulated in an EU location. Laws are already in place in Gibraltar to ensure the re-domiciliation process is as simple and efficient as possible for a streamlined process and Gibraltar based fund administrators can offer services to funds domiciled in another jurisdiction such as the Caribbean, to relocate to Gibraltar and ensure the smooth transition of the fund.

For EU fund managers it is very easy to deal with counterparties in and possibly even relocate their business to Gibraltar. With a similar legal structure to the UK, issues that can be found when dealing with offshore jurisdictions outside of the EU do not exist and Gibraltar offers a good geographical location. Gibraltar is very accessible with regular flights into Gibraltar from the UK and Malaga international airport is one hour’s drive away, which connects to the whole of Europe. Many people relocating to Gibraltar not only enjoy doing business in a regulated EU jurisdiction but also to relax in the attractive national park and beaches surrounding the Rock or on one of the numerous golf courses in the area at weekends.

There are no restrictions for EU citizens or Swiss nationals wishing to work in Gibraltar and there are very beneficial tax opportunities for highly skilled staff brought over to Gibraltar. Settling in Gibraltar can be an attractive proposition, not only from a lifestyle point of view, but also a financial perspective. More and more managers based in London and Switzerland are looking for a viable alternative jurisdiction and Gibraltar is becoming more recognised for offering this.