By Joseph Gomez, Consultant and Sebastian Triay, Senior Associate, Private Client Team, Triay Lawyers

Gibraltar offers a compelling seeking tax efficiency, lifestyle benefits, and a stable jurisdiction. With its Category 2 and High Executive Possessing Specialist Skills (HEPSS) statuses, Gibraltar provides a robust framework for wealth preservation and personal relocation.

For investors

Gibraltar is a tax efficient jurisdiction ideal for wealth growth and protection. It imposes no tax on capital gains, dividends, interest, or wealth, making it attractive for those with diversified portfolios or passive income streams.

Category 2 Status is designed for individuals with a minimum net worth of £2 million. It caps income tax liability between £39,940.00 and £44,740.00, regardless of global income. Investors can continue operating businesses outside Gibraltar without local tax implications and may even structure operations through Gibraltar based entities under certain conditions.

Key benefits:

• No tax on investment income;
• No inheritance or succession tax;
• British legal framework and financial stability;
• Appealing lifestyle for family relocation.

For family offices

Gibraltar is a strategic base for multi-generational wealth planning. Its absence of inheritance, wealth, and capital gains taxes allows family offices to preserve and transfer wealth efficiently. The jurisdiction supports trusts, foundations, and corporate and partnership structures (including cellular structures) that align with global estate planning strategies.

Principals of family offices can apply for Category 2 status, securing personal tax efficiency while managing global assets. Gibraltar’s legal system, based on English common law, ensures privacy, asset protection, and regulatory clarity.

Key benefits:

• Tax-efficient wealth transfer;
• Legal certainty and confidentiality;
• Flexible structuring options for global holdings;
• Lifestyle appeal for family relocation.

For relocation consultants

Gibraltar offers a clear and efficient pathway to residency. The Category 2 and HEPSS statuses have well defined financial and accommodation requirements. The jurisdiction is English-speaking, safe, and offers a Mediterranean lifestyle ideal for clients seeking both tax benefits and quality of life.

HEPSS status is tailored for executives earning over £160,000.00 annually and possessing specialist skills that contribute to Gibraltar’s economy. It limits tax liability to £39,940.00 and requires local employment.

Key benefits for clients:

• Fast-track residency process;
• No wealth, capital gains, or inheritance taxes;
• Business-friendly environment;
• High standard of living and connectivity.

Residency requirements

To qualify for Category 2 or HEPSS, applicants must:

• Secure approved residential accommodation in Gibraltar;
• Provide two professional references (one from an international bank);
• Hold private comprehensive health insurance;
• Submit proof of net worth (£2M for Category 2) or income (£160K+ for HEPSS);
• Provide a valid passport and CV.

Once approved, applicants must apply for a Civilian Registration Card.

HEPSS applicants must not have lived or worked in Gibraltar in the 36 months prior to applying.

Application process

• Application fee currently £1,233.00 for either Category 2 or HEPSS;
• Category 2 applicants once the status is granted are required to deposit an amount equal to the maximum tax liability, refundable when the status is ended;
• Certificates are issued indefinitely, subject to continued compliance.

Summary of UK-EU Treaty negotiations regarding Gibraltar (September 2025)

On 11 June 2025, the UK, EU, Spain, and Gibraltar reached a political agreement on the core aspects of a future treaty governing Gibraltar’s post-Brexit relationship with the EU. Key elements include removal of border checks between Gibraltar and Spain, dual border checks at Gibraltar’s airport and port, a customs union between Gibraltar and the EU, and cooperation on law enforcement, taxation, environmental standards, and frontier workers’ rights.

• Disappearance of the physical land border with Spain;
• Immigration control will be relocated to Gibraltar’s International airport;
• Gibraltar will not join the Schengen Area, but Schengen rules will apply to non- 16 Gibraltar International www.gibraltarinternational.com residents entering via Gibraltar;

Negotiators aim to finalise the legal text by October 2025, with ratification expected by Christmas and implementation in early 2026.

The treaty does not affect the sovereignty of Gibraltar. A new bilateral cooperation agreement between the United Kingdom and Spain was signed in September 2025, focusing on economic growth and migration, building on the Gibraltar deal.

Conclusion

Gibraltar offers a rare combination of tax efficiency, legal stability, and lifestyle appeal. Whether you’re an investor, a family office, planning for future generations, or a consultant guiding clients through relocation, Gibraltar provides a robust framework for strategic residency.

By securing Category 2 or HEPSS status, individuals can achieve limited income tax exposure and a secure and attractive base for global operations. Gibraltar isn’t just a geographical location it’s a lifestyle and business hub for forward thinking individuals and families.

The post A strategic opportunity for Gibraltar residency and tax planning appeared first on Gibraltar International Magazine.

By David Coupe, InsureLaw Consultants Limited

T he UK insurance sector complains about costly, burdensome and unnecessary regulation, and unresponsive and slow regulators. The UK market is recovering from significant claims and suffering inflationary times, and raising more capital is more costly. Insurers and MGAs are pulling out of lines simply because they are too difficult to deal with due to regulatory or cost reasons. Expenses, especially salaries, have risen. And all of this despite premium rates increasing and holding steady for 2024. UK entities are crying out for real game changers, and Gibraltar can provide this.

Artificial Intelligence and technology

The noise is around the use of AI and technology to drive “better outcomes” for insureds, and reduce costs. However, the UK doesn’t need an offshore innovation hub for these – it has them and they are well funded. Lloyd’s and the UK have brought in and/or developing captive regimes. Bermuda, Guernsey and others offer successful PCC structures that are more flexible than Gibraltar’s. Dublin, Dubai and others have set up separate financial services centres with tax breaks, lower levels of regulation, and other incentives.

Speed to market is fundamental. UK entrepreneurs are being stifled by slow regulatory processes. For each that succeeds, twenty don’t. What is a great idea today often disappears tomorrow. Guernsey has recently approved a commercial MGA and Protected Cell structure in a little over 2 weeks, and yet no one sees Guernsey as an unsafe financial regime (albeit that Guernsey isn’t bound by UK regulations).

The current drive to promote local talent is to be applauded. However, without the experienced mentors, who will teach them? How would we attract senior underwriters to come here to pass their knowledge? Could we create an Insurance, AI and Insurtech University? Could we sponsor UK expertise to come?

Financial Conduct Authority

The Gibraltar Authorisation Regime (GAR) will tie UK and Gibraltar regulation together. Gibraltar will have free access to the massive UK market. However, GAR brings difficulties. The UK will want Gibraltar to provide no less regulation than in the UK. However, if the FCA Handbooks are substantially adopted, then we must accept that (I am told) some 8 metres of paper piled high will need to be embedded into Gibraltar laws. Gibraltar doesn’t need this – we need the “dual regime”.

What is the dual regime? The UK will not allow Gibraltar to operate a lesser regime regarding UK consumers (however badly embedded in the UK already). However, when dealing with “non-consumers”, we should be insisting on creating a new focussed and flexible wholesale regime. The FSC should set up a corresponding separate wholesale division to deal with this regime.

MGAs

A Gibraltar regime created for the nonconsumer business with lighter touch regulation promising quicker response and speed to market would clearly be of interest. A UK MGA or wholesale broker dealing with producing brokers in say the US is regulated like any other broker. They must currently comply with a consumer code which has little or no relevance to them. There is supposed to be proportionate regulation, and yet the dividing line in the UK is distinctly blurred. Who does this benefit? Let Gibraltar create regulation that reflects genuinely what these intermediaries do with lower cost and regulation.

Gibraltar could offer the incentive to them: split your businesses, and bring your wholesale business here. Where these large businesses go, they bring the insurers and markets with them. This brings little or no regulatory risk or need for regular oversight. We should reduce the capital requirements for these brokers and MGAs. The 4% level is considerably greater than in the UK, and disincentive offering no benefit. Wholesale businesses facilitate the distribution chain. If they disappear, the insured suffers no loss since its contract is with the insurer and remains. None of the top 10 wholesale MGA’s or brokers would simply walk away from a Gibraltar operation due to the reputational damage it would cause.

PPC

We would not need the current requirement for Gibraltar resident directors. These wholesale businesses operate around the world – they work by Zoom. This doesn’t reduce accountability. And each Gibraltar entity will in any case benefit from massive PI and D&O programmes written by each group.

We should disapply Section 83A for these entities. The Section is a significant turn off for overseas investors. They view it as something far more invasive than in the UK, and an unnecessary regulatory interference. The wholesale market will not come with this in place.

Why cannot we have a PCC structure for aligned wholesale intermediaries with lighter touch regulation, and a real speed to market? MGA’s want their own captive capacity – why not an MGA PCC running alongside and Insurance PCC, with each cell writing niche business?

Developing reinsurance and ILS markets alongside this wholesale market should be attractive to Gibraltar. We don’t need the UK’s consumer duty hovering over these. Again, these should need less regulatory supervision and should not threaten the stability of Gibraltar direct UK offering.

The idea of splitting consumer business away from other business clearly makes sense. Let Gibraltar prove to the UK and the international markets that an offshore wholesale market can be created that benefits all.

The post One size never fits all – a Dual Regime is needed appeared first on Gibraltar International Magazine.

As part of the 25 years celebrations, we look back at the insurance industry over the same period, by David Coupe, InsureLaw and Yvonne Chu, Hassans International Law Firm

Gibraltar’s insurance sector was in its infancy. The regulatory framework was then governed by the Insurance Companies Act 1987 (“Insurance Act 1987”) and supervised by the Financial Services Commission.

In the UK, insurers were regulated by HM Treasury, and intermediaries were unregulated. Interestingly, insurance intermediaries were already regulated under Gibraltar’s Financial Services (Investment and Fiduciary Services) Act 1989.

In both the UK and Gibraltar, directors’ duties were based on common law principles. However, the tools available to the courts and regulators were weak in both jurisdictions, and rarely exercised.

The EU hadn’t had much direct impact either. Solvency I was in place, and Solvency II had not occurred. There was no Mediation Directive. There was little governance over the conduct of directors or products. A consumer duty was about as likely as a man on Mars! BREXIT was never discussed.

Companies law evolution

Companies law has changed considerably in both jurisdictions.

Gibraltar’s Companies Act 2014 modernised local company law, but, although based on the UK’s Companies Act 2006, it did not adopt the UK’s codified “general duties” and obligations of directors.

The Companies Act 2006 codified centuries of case law as regards directors’ duties. but with no material changes. The principal duty remained subjective i.e. a director must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. It is the director’s knowledge that matters based on the circumstances that presents itself to them.

UK Insolvency Law has not changed since 1986. The personal remedies for directors’ misfeasance, and fraudulent and wrongful trading, remain the same. The Enterprise case summarises and applies the relevant UK caselaw, although Gibraltar insolvency laws have some subtle differences. However, it is difficult for us to draw much from the case. The Court accepted expert evidence that Enterprise was insolvent much earlier than the date of formal insolvency. This seems to be substituting the directors’ view at the relevant time, knowing what they knew then, with a retrospective view many years later. This raises many potential uncertainties for insurance company directors though.

Directors’ Disqualification

Unlike the UK, Gibraltar does not have any statutory provisions or legal framework like the Directors Disqualification Act 1986. However, both the Gibraltar and UK regulators now have significant powers to sanction and ban directors under regulatory laws (see below).

Financial services revolution

The Gibraltar Financial Services Act 2019 (FSA 2019) is a significant step forward in regulating individuals who hold positions of significant influence, including directors, and board members require prior GFSC approval. The FSA 2019 also imposes onerous obligations on directors of insurance companies.

The UK Financial Services and Markets Act 2000 represented a major change in the UK, and subsequent regulations have extended these changes. The new 2023 Act goes even further.

The Financial Services Centre (FSC), and the UK Prudential Regulation Authority and Financial Conduct Authority, undoubtedly now have significant teeth. They now have powers to raise hefty sanctions, bans and fines against directors and companies alike.

Fit and proper test

In Gibraltar, the tests for being a director have increased under the FSA 2019 and the Regulated Individuals Regime. Further, with the introduction of Section 83A FSA 2019, further obligations are imposed on directors as they are now required to determine whether any transaction that comes before them constitutes a material change that is notifiable to the GFSC or needs its approval. This requirement needs much time to bed in, but has created much uncertainty amongst directors.

In the UK, almost anyone could become a director 25 years ago. Now there are high thresholds requiring directors to prove they have the requisite skill and experience, and they must undertake continuous professional development. Some insurers have long induction courses to ensure compliance.

The march of the consumer

Perhaps the greatest change will come from 1st August 2023 – the introduction of the UK Consumer Duty. Gibraltar is also transposing the consumer duty into local law. Directors will have the additional burden of proving that the rights of consumer are prioritised on any business decision that comes before them. They must ensure that the consumer is at the heart of their business, with potential sanctions if they do not. They must demonstrate that they have put the necessary framework in their business to champion the rights of the consumers. The directors are once again in the firing line if they are not able to demonstrate this.

D&O Insurance – partial pain relief

25 years ago, the use of this was limited. However, its use in Gibraltar became more widespread, after the introduction of the Regulated Individual Regime, and the onerous obligations placed on directors under the FSA 2019. The same has occurred in the UK after the 2006 Act.

D&O continues to offer comfort to directors but does not provide protection against all liabilities. Wordings and levels of cover vary considerably, and care is needed when assessing such policies. The same applies to professional indemnity and fidelity insurances.

BREXIT – good for directors?

BREXIT was not what Gibraltar wanted. It severed many direct avenues of distribution, caused duplication of capital requirements, and created hostile EU Regulators. However, it removed the complexities of dealing with EU markets. The Enterprise case showed some of those difficulties. Perhaps not having to deal with the vagaries of Europe will assist directors.

The UK

BREXIT meant that Gibraltar became very dependent on the UK – and vice versa! And this mustn’t be forgotten – 35% of the UK motor insurance market is written in Gibraltar. How the Gibraltar Authorisation Regime is implemented, and what it means for directors in both jurisdictions remains to be seen. However, one can expect more cross-border responsibility to arise, and directors potentially having an eye on two regimes at the same time!

The next 25 years increasing liability but more certainty?

Change will occur over the next 25 years, but probably not at the same pace. The regimes are already strong; legislators will simply look to plug holes as they arise.

Consumers will gain wider rights – perhaps even personal rights against companies or directors. The consumer challenges for directors will grow – whether the benefits to consumers will increase commensurately is debatable. The clash between prudential requirements and the consumer duty will become obvious – the higher cost of compliance and claims incidence arising from the duty will require more capital but will inevitably be passed to the consumer through higher premiums. However, whilst politicians see protection of the consumer as their mantra, the industry will need to respond.

Insolvencies will also continue – insurance is a risk business, and however one tries to ensure that insolvency doesn’t occur, the spectre will remain, and directors sued personally. Will a relaxation of the Solvency II rules cause more insolvencies?

Perhaps we have seen the end of the more radical changes. In 25 years’ time, perhaps this periodical can report that there is a clear level playing field where directors have full certainty as regards their legal and regulatory duties and liabilities. Today, they clearly do not, and uncertainty prevails.

The post Gibraltar’s insurance sector over the past twenty-five years appeared first on Gibraltar International Magazine.

In late 2020 a Bill to repeal and re-enact with amendments and modifications the Fair Trading Act 2015 (the Act) was published. The Fair Trading Bill 2020 (the Bill) introduces a series of important changes to Gibraltar’s business licensing regime. Whilst there may still be slight changes to the Bill, it is expected that the Bill shall go before Parliament in the coming months and, if approved, shall become law in 2022.

The Bill establishes the continuation of the Office of Fair Trading (OFT) and strengthens its investigatory and enforcement powers; makes provisions for the protection of consumer interests (including the prevention of anti-competitive practises) and for the making and investigation of complaints; encourages good business practices towards consumers; and makes provisions for the licensing of businesses, previously the remit of the Business Licensing Authority (BLA).

One of the most significant changes in the Bill is the establishment of the Decision Making Committee (DMC), which shall replace the BLA. The DMC will exercise, on behalf of the OFT, the OFT’s powers in respect of a specified decision (imposing an administrative penalty or award of compensation, revoking, suspending, or refusing to renew a licence, or exercising a sanctioning power in a manner that prevents business being carried on) and consider appeals from any decision made by the OFT other than those initially made by the DMC. The committee will be comprised of eight persons, four of which must be lawyers with no less than ten years professional standing and who are barristers or solicitors of the Supreme Court of Gibraltar, as well as one representative from the Gibraltar Chamber of Commerce and the Gibraltar Federation of Small Businesses.

Do I need a Business Licence?

There is a presumption that everyone conducting business in Gibraltar will need a business licence. Sections 24 & 25 of the Bill stipulates that no person shall carry on business without a licence issued for that purpose by the OFT, unless that person is:

• employed by a person who carries on business;
• a director or shareholder of a body corporate which carries on business;
• a body corporate providing services to other persons in the same group (as defined in the Companies Act);
• carrying out domestic services to a private household;
• a journalist or is in printing and distributing a printed newspaper as defined in the Newspapers Act;
• carrying on business as a cottage industry, artisan, or as a service provider with an annual turnover which does not exceed a sum as may be prescribed by regulation from time to time, although such persons will be required to register with the OFT and renew their registration annually;
• appointed to conduct a sale of any goods in execution of an order of any court; or
• sells any goods, or provides any services either solely as a necessary incident to the provision of any professional or other services, or in connection with the raising of funds for philanthropic, charitable, cultural, sporting, or educational purposes. However, such persons will be required to inform the OFT in writing prior to selling the goods or providing the services.

Regulated businesses as defined in section 36 of the Bill, other than those under the Tobacco Act 1997 or Part II of the Licensing and Fees Act, will be exempt from the provisions of the Bill. These include services or sale of goods under the following Acts (or respective regulations): Financial Services Act 2019; Medical & Health Act 1997; Legal Services Act (when enacted); Gambling Act 2005; Petroleum Act; Firearms Act; or the Leisure Areas (Licensing) Act 2001.

Applications

Subject to conditions, the OFT shall within five working days of receipt of a licence application give notice by way of publishing on its website. This is a significant change to the current application process which requires notice to be given by the applicant via the Gazette and local newspaper.

Once issued, a business will be required to display their licence number on the homepage of any website it maintains, in addition to the existing requirement that a business must also display its licence prominently in the premises to which it relates.

Business Premises

In accordance with section 27 of the Bill, applicants will be required to submit evidence that they will be operating from a premise that is appropriate for the nature of their business, although a waiver may be granted providing the OFT is satisfied the business can be properly carried on without premises.

Factors which will determine the appropriateness of or need for business premises include (but are not limited to):

• whether the business is an online provider of services;
• the type, nature, and volume of goods to be sold (if any);
• the degree and type of contact with clients and supplies; and
• the number of employees that the business has or will require (if any) to carry on business appropriately.

Two businesses residing in the same premises may be granted one joint licence at the OFT’s discretion, if it is determined that the businesses can be carried on compatibly in the same premises.

Refusal of a Licence

In addition to the general principals affecting the granting of licences as outlined in the Act, the Bill identifies four further grounds on which a licence application may be rejected. The OFT may refuse to grant a licence if it is satisfied that:

• the premises do not accord with the Official Address Register or equivalent records held by Land Property Services;
• the applicant is a natural person who is not entitled to reside or work in Gibraltar in accordance with the laws of Gibraltar;
• the business is a Specified Business and the OFT is not satisfied that the person has the necessary skill, competence, qualification, or resources to carry on that business safely; or
• the applicant fails to provide to the satisfaction of the OFT any information outlined in the Bill or regulations provided with an application.
• The Bill defines a ‘Specified Business’ as one which involves the introduction or insertion of any substance into the body of a person; tattooing; the application or administration of prescription-only medicine; the provision of counselling or therapy; or any process that involves the breaking of another person’s skin.

Additionally, the Bill determines that the OFT may refuse to issue a licence in respect of business requiring a licence, authorisation, registration or other form of approval or permission under any other enactment which has not been obtained by the person or in respect of the premises.

The OFT retains the right to refuse a licence on the grounds that the applicant or premises differs to that which obtained any licence, authorisation, registration or other form of approval or permission under any other enactment.

The Bill also introduces a fit and proper criteria, which is not contained in the Act, whereby the OFT shall refuse to issue a licence to any person who, in the opinion of the OFT, is not fit and proper to carry on the business. A person will not be considered fit and proper for a licence if:

1. the person has been convicted of a crime the OFT considers material to the application, within 5 years preceding the date of application; or
2. being a company, has a director, shareholder or ultimate beneficial owner to whom (a) applies; or
3. being a trust or foundation, has a beneficiary to whom (a) applies; or
4. being a partnership, has a partner who is a person to whom (a) applies; or
5. the OFT is not satisfied that the Relevant Person (as defined in section 30) is not a fit and proper person with regard to the provisions of the Proceeds of Crime Act 2015 or any other law of Gibraltar concerned with the identification or eradication of money laundering or terrorist financing.

Money Laundering and Financing of Terrorism

Section 30 addresses the application or transfer of a business licence by an estate or letting agent; a dealer in high value goods; a high risk dealer; a potential high value dealer; an art market participant; or such other business as prescribed by the Minister in regulations.

Any change affecting a Relevant Person shall be notified to the OFT within 7 days, upon receipt of which the OFT shall conduct a fit and proper check.

Register of Licences

The Bill introduces the register of licences (Section 52) kept by the OFT which shall contain particulars in respect of every licence issued including but not limited to: the date of issue; name and business name of the licence holder; nature of business and premises at which it is authorised to be carried on; every transfer, extension, or renewal of licence; and every transfer of premises.

Enforcement and Sanctioning Powers

The OFT (and subsequently the DMC) may exercise a sanctioning power against a person following a complaint or of its own motion if the person has carried on business in a manner that the OFT considers to be harmful to consumer interests, or if the person has contravened a regulatory requirement. Such powers may take the form of:

• an undertaking;
• an administrative penalty (an amount payable to the OFT within 28 days);
• a cease and desist order (obliging the person to cease any activity considered to be a contravention);
• a directions order (obliging the person to fulfil a specific requirement in order to comply with the Bill or any other regulations or requirements lawfully imposed by the OFT);
• a compensation order (an order whereby a person must pay a sum to any person adversely affected by a contravention by way of compensation or, where relevant, a refund);
• a licence intervention order (which may temporarily suspend or revoke a licence); or
• a prohibition order.

The OFT must ensure that any sanctioning action is reasonable, proportionate, effective and dissuasive, taking account of all relevant circumstances including those outlined in subsections 94(a) to (g). The OFT must provide the person, in writing, with a warning notice before proposing to take a sanctioning action is taken. Once a sanctioning action is decided by the OFT, the person concerned must be issued with a decision notice.

The post Proposed changes to Gibraltar’s Business Licensing Regime in 2022 appeared first on Gibraltar International Magazine.

We are often asked about the extent to which prenuptial agreements and other financial agreements between spouses are enforceable. In short, the local Matrimonial Causes Act 1962 (Gibraltar) (MCA) contains express statutory provision enabling  spouses or future spouses to enter into a financial agreement either before, during, or after marriage.

To what extent are pre- and post-nuptial agreements binding in Gibraltar?

Under Part VIA of the MCA, pre- and post-nuptial agreements are binding in Gibraltar as financial agreements. An agreement will constitute a financial agreement under the MCA if all of the following apply:
•It is expressed as a financial agreement.
•The spouses or the parties contemplating marriage make a written agreement regarding how finances should be dealt with in the event of marital breakdown, provision for spousal maintenance during marriage and/or divorce, as well as other matters incidental or ancillary to the treatment of finances and maintenance.
•At the time of the agreement, the parties are not bound by any other agreement regarding the matters provided above. 

What are the requirements for a financial agreement to be binding?

For a financial agreement to be binding under the MCA, it must: 

• Be signed by all the parties.
  •Contain a certificate of independent legal advice signed by the lawyer concerned which records that the party has been advised as to the effect of the financial agreement on the rights of that party, and the advantages and disadvantages at the time that the advice was provided, to the party of making the financial agreement. Necessarily each party must therefore be separately and independently represented.

Pre-nuptial agreements

Unlike the position in England and Wales where pre-nuptial agreements are only persuasive, they are binding in Gibraltar subject to compliance with and the terms of the MCA. 

The terms of a pre-nuptial should be negotiated and concluded in a reasonable period before the date of any marriage (e.g. negotiations to commence no later than 3 months prior to the wedding and concluded no later than 1 month in advance, to allow for an appropriate ‘cooling-off’ period in advance of the wedding). The negotiation will usually include the disclosure of the respective parties’ assets, income, and financial interests in order to ensure that both the weaker and the stronger financial parties can each be independently advised and negotiate terms on a transparent basis.  

The advantages of entering into a pre-nuptial agreement include: 

• Clarity and certainty – the future spouses can agree at the outset of their marriage  how their finances will be distributed in the event of marital breakdown. This can include how their assets should be treated as well as provision for spousal maintenance. Such agreed terms should save the spouses the time and expense of litigating over financial matters in the event of separation or divorce.
  •Transparency – the spouses will be given the opportunity to provide financial disclosure of their respective assets and income whilst negotiating the terms of a pre-nuptial agreement so that the parties are fully aware of their respective financial positions at the outset of the marriage. 
• Protection of assets – it is possible to “ring-fence” assets from the claims of the other party in the event of divorce or separation e.g.  inherited assets, gifts, or assets acquired prior to the marriage. 

The disadvantages of entering into a pre-nuptial agreement include:

• It can be considered “unromantic” - sometimes parties to a future marriage are concerned or hurt by the other party raising the issue of entering into a pre-nuptial agreement in advance of marriage. It is therefore a sensitive subject.  In our experience, there are often good reasons for such agreements (e.g. the wealth of one party and the need to try to ring fence pre-marital assets; the fact that one party has been married before and been through an acrimonious divorce/ contested financial proceedings. These examples are not exhaustive).
• Review/change of circumstances – It is recommended that the terms of a financial agreement are subject to review (e.g. in circumstances where the parties have children or there is some major financial change or in accordance with any review provision contained in the agreement).  This means that the review itself can provide a degree of future uncertainty depending on what the review relates to.  
• Financial agreements can be set aside under the MCA – a financial agreement (including a pre-nuptial agreement) can be challenged by one of the spouses and set aside by the Court in the  circumstances as explained  below. 

Can financial agreements be set aside or terminated?

Yes, financial agreements can be set by the Supreme Court of Court if it is satisfied that:

• The agreement was obtained by fraud.
• A party to the agreement entered into the agreement to defraud or defeat a creditor(s) or with reckless disregard of the interests of a creditor(s).
• The agreement is void, voidable or unenforceable.
• There has been a change in circumstances since the agreement was made, making it impracticable for the agreement or part of the agreement to be carried out. 
• There has been a material change of circumstances since the agreement relating to the welfare and development of a child of the family. 
• A party to the agreement engaged in conduct that was in all circumstances unconscionable. 

In any case, the parties can also terminate any existing agreement by entering into a new financial agreement or a termination agreement. 

Overall there is therefore a balance to be struck in ensuring that the terms of any financial agreement can be viewed independently as being reasonable and fair.

The post The status of pre-nuptial and post-nuptial agreements in Gibraltar appeared first on Gibraltar International Magazine.

By Valerie Holliday and James Lasry, Financial Services Partners, Hassans International Law Firm

The financial services industries including banking, insurance, investment and fund management, have always played an important role in both the UK’s and Gibraltar’s economies. Much of this business has been cross-border with other EU Member States, often using the EU financial services passporting regime. Brexit has put an end to this such that UK firms can no longer do business in the EU on the basis of their home state licenses. Neither, indeed, do EU firms have direct access any longer to one of the world’s greatest capital markets. Clearly alternative solutions must be found. Luckily, Gibraltar is able to offer opportunities through its ongoing passport regime with the UK.

The reality is that many companies must address their loss of market access to the UK which they have enjoyed under EU passporting rights. Clearly, one option is for EU firms to set up in the UK and go through the FCA regulatory licencing processes. Prior to Brexit, there were c 6,000 financial services companies that passport into the UK from the EU. It is easy to see how the regulatory bottlenecks may be tight for new applications at the UK regulators. The risk of losing revenues is very real.

Gibraltar is now the only jurisdiction in the world that enjoys passporting rights into the UK. The origins of the Gibraltar UK financial services passport actually stem from an anomaly in EU legislation which provided for passporting only between member states. Gibraltar, although a separate jurisdiction from the UK, with its own legislature and financial regulator, was considered as the same Member State in the context of EU legislation. This meant that Gibraltar firms could passport to other Member States such as France and Germany but not to the UK. This was addressed in the Financial Services and Markets Act 2000 (Gibraltar) Order 2001 (the Gibraltar Order) which was an instrument of primary legislation in both the UK and Gibraltar and the product of a bilateral agreement between those jurisdictions. The Gibraltar Order in essence allowed for the rights enjoyed under the European passport to be extended bilaterally between the UK and Gibraltar.

EU entity

Post Brexit, the UK and Gibraltar governments have agreed that Gibraltar licensed firms will continue to be able to provide their services into the UK market and set up branches in the UK on the strength of their Gibraltar licence. Therefore, for an EU entity that has lost its right to passport into the UK, a new Gibraltar subsidiary (or sister company) may be able to continue to access the UK market. Gibraltar is the only jurisdiction outside the UK that can offer this.

The UK and Gibraltar Governments are committed to ensuring that such market access continues. Although the substance of the passport is intended to continue into the long term, the Gibraltar Order has been superseded by other legislation that takes the post-Brexit framework into account. The UK Government has published the Financial Services (Gibraltar)(Amendment)(EU Exit) Regulations 2020 which extends by 12 months the transitional arrangements under Parts 2 and 3 of the Financial Services (Gibraltar) (Amendment)(EU Exit) Regulations 2019 which, inter alia, facilitates the access by Gibraltar-based firms to the UK financial services market and vice versa.   These transitional arrangements have now been extended until the end of December 2021.

The Gibraltar Government has published the Financial Services (Passport Rights and Transitional Provisions) (EU Exit) Regulations 2020 which similarly retain reciprocal passporting rights for Gibraltar firms and UK firms in respect of financial services which are regulated under the Single Market Directives.

Gibraltar Authorisation Regime

These arrangements will be superseded by a new long-term framework as part of the Financial Services Bill that has already been introduced to the UK Parliament on 21 October 2020. This new Bill will establish a new legal and institutional framework “the Gibraltar Authorisation Regime” to provide for mutual market access and aligned standards in financial services between the UK and Gibraltar.

The framework will reflect the unique and historical relationship between the two jurisdictions which do not apply to other jurisdictions. The regime will be based on the three following conditions:

1. Compliance with certain objectives such as maintaining financial market stability and the protection of consumers;
2. The alignment of law and practice so that there is a consistency of approach in the two jurisdictions; and
3. Close cooperation between the UK and Gibraltar authorities in order to ensure that they support each other in the fulfilment of their respective duties and exchange relevant information as required.

It is expected that the development, implementation and oversight of the Gibraltar Authorisation Regime will be likely to involve further secondary legislation on both sides.

Firms based in Gibraltar have long made extensive use of the market access arrangements between Gibraltar and the UK. The insurance industry, in particular, has made significant inroads into the UK market such that over 20% of all motor insurance policies are written by Gibraltar firms. Banking and fund management also benefit from the passport. The Gibraltar UK passport is therefore a tried and tested route into the UK.

Unique proposition for EU firms

Although the Gibraltar Financial Services Commission (GFSC) is statutorily obligated to maintain the same regulatory standards as those of the FCA, there is no doubt that a regulator serving a smaller market is able to process applications with greater speed.

This, together with Gibraltar’s low tax regime and its culture of good corporate governance make it a jurisdiction of choice with a unique proposition for EU firms wishing to do business in the UK.

This article should not be regarded as intended to provide legal advice and should not be relied on. Specific legal advice in relation to any matter should be sought.

The post Gibraltar’s unique passport for EU access to the UK appeared first on Gibraltar International Magazine.

By Jay Gomez, Javi Triay, Rupert Moffatt, Triay & Triay Financial Services Team

Cannabis stocks are hot property right now. Over the last few years there has been a surge in interest in investment in the industry which has led to proliferation of opportunities for pioneering investors prepared to take a punt (both from a legal and asset class point of view) on the growing industry.

Some market analysts have estimated that the total cannabis industry in Europe by 2028 will be worth over £100 Billion. Coupled with the growth and changing legislation across North America there is space for investors to claw back losses in the post-Covid economy seeking high returns through canny investment in regulated ventures.

The growth has largely been driven by changes in attitudes towards cannabis over the recent years – the UK, Canada, and the US providing real examples of change. The then UK Home Secretary, Sajid Javid, made changes to the licensing and use of medical grade cannabis after high profile medical cases, such as that of Alfie Dingley, highlighted the potential benefits of the drug as a treatment for severe epilepsy. As well as this, the British and Gibraltar highstreets have seen a flood of cannabis related products deriving their ingredients from CBD, the non-psychoactive substance within cannabis said to have health benefits from relieving anxiety to relieving pain.

Strict controls in place

On the other side of the pond, we’ve seen Canada become the first G7 country to legalise the production, sale and use of cannabis to a potential market of nearly

40 million people, with over $1.2 Billion in legal sales of cannabis in 2019 while contributing many more billions to the GDP of the country. Whilst in the US, California alone saw over $3.1 billion in sales over the course of 2019.

However, unlike other more conventional or crypto-based investments, there are strict controls in place based on the criminalisation of the growth and sale of cannabis. This has prevented institutional and retail investors investing without significant risk. The risk comes from uncertainty brought about by the interaction of the Crimes Act 2011 (CA) and the Proceeds of Crime Act 2015 (POCA).

What we have then is a situation where the production and sale of cannabis containing THC, the psychoactive substance in cannabis with a level over 0.3%, in Gibraltar remains illegal as a result of CA. When combined with POCA, any money gained as a result of the growth and sale of cannabis outside the strict regulations, will be considered criminal conduct, resulting in any income being considered “criminal property”. This all seems very clear. However, when we look abroad to make investment in cannabis where the same restrictions do not apply, certainty is not guaranteed.

Legal and regulated

Very simply, conduct deemed illegal in Gibraltar may also be deemed illegal by the Gibraltar authorities if the same conduct takes place abroad, even in a jurisdiction where the activity may be legal and regulated, and thus, any proceeds of said conduct may be considered the proceeds of crime. This is commonly referred to as the ‘Spanish Bullfighter’ problem – bullfighting is legal in Spain, but illegal in many other countries. If a bullfighter holidays and spends their money in a country where bullfighting is illegal, they may be guilty of using the proceeds of crime.

Unfortunately, there are few defences baked into the legislation – and with sentences for producing and selling cannabis ranging from 12 months to life in prison, the downsides are considerable when investing in a jurisdiction where the regulatory regime is different to Gibraltar. Whilst there has been no definitive guidance from the Gibraltar authorities on what an investor may or may not do in regards to cannabis investment – investors are at real risk of returns being deemed the proceeds of crime and falling foul of the Gibraltar authorities and their anti-money-laundering obligations.

Risk free access into cannabis related products

So, whilst the future of cannabis legislation in Gibraltar is uncertain, opportunities remain available to investors.

We have been at the vanguard in seeking to change legislation to enable risk free access into cannabis related products providing that they are legal in the jurisdiction where the activity is being carried out. As a result, the Gibraltar government have been consulting with stakeholders and other interested parties on what steps can be taken to protect incomes from investment overseas without the risk entailed when investing in other jurisdictions.

Facilitating the investment in new and growth sectors has been a speciality for Gibraltar, where there exists a strong and well-developed financial and legal infrastructure to protect investors. The cannabis economy looks set to ignite and trusted partners are needed to help negotiate the potential pitfalls. Gibraltar is set to be well placed to offer the services and certainty lacking elsewhere to help investors who are keen not to miss the boat when it comes to cannabis investment.

The post The growing industry of cannabis stocks appeared first on Gibraltar International Magazine.

Gibraltar’s legal profession is experiencing one of its greatest shake-ups in 50 years, while events have brought it into the international spotlight, Ray Spencer reports

The jurisdiction’s legal profession has grown significantly since the 90s, largely the result of expansion in financial services and eGaming, as well as burgeoning property development in more recent years, all requiring support from attorneys.

Extensive use has been made of government legal drafting services supported by lawyers in private practice to prepare new and updated statutes to cover EU directives and emerging markets. In recent years, the workload has intensified from the BREXIT issue, which affects Gibraltar as being part of the UK’s membership of the EU.

But from May all 300+ lawyers – working in Gibraltar law firms, government departments, official bodies and, for the first time, within businesses – must be registered to receive practicing certificates from the embryo Legal Services Regulatory Authority (LSRA), a recently-created statutory body responsible for the registration and regulation of the jurisdiction’s legal profession.

At present, there is no complete list of lawyers: the Gibraltar Courts Service in November identified 245 people – barristers and solicitors in a fused profession for court appearances (unlike England where only barristers are able to do so) – working in some 40 law firms. The Bar Council (now known as the Law Council) list from January 2019 gave 156 names as members, including some from the private sector.

Founding Chairman of the LSRA, Sir Peter Caruana QC, a former Chief Minister for 15 years and arch litigator, revealed his initial budget of £480,000 would be met from a tariff of varying annual fees ranging from £300 to £1,250 for individuals, including business in-house lawyers. Law firms will need to pay £1,000-£2,500pa dependent on the number of practice partners.

All being regulated

“The Bar Council has never been more than a representative body of lawyers – almost the lawyers’ trade union – but it is not essential, nor mandatory, to be a member although most lawyers are,” Caruana declared. He added: “We will be publishing a list, and although we have not discussed it, I cannot imagine that a register and role of certificated lawyers should be anything other than public, certainly by May when the 2020 practicing certificates are issued.”

David Dumas QC, one of Gibraltar’s most senior lawyers with a wealth of experience of the legal profession and its practice, including serving for many years as chairman of the former Bar Council – has the task of forming the LSRA. As chief executive, the ex-Hassans partner, is ensuring money laundering and other staff are in place as well as “an outreach programme to the wider legal profession”.

As Caruana put it: “There is a supposition that lawyers will be familiar with the new legislation, but it can’t be assumed; the outreach will be privately and through the media to ensure that people comply with the registration process.”

Over the next three years Dumas will sift any complaints made against lawyers to establish their veracity, prior to more detailed consideration and adjudication by the six-strong LSRA Board made up of a mix of appointees external to the profession and lawyers, including the Law Council chairman at the time.

“My aim is to ensure that this new LSRA regime gets off to a good, credible start and that consumers, who may have complaints against lawyers, realise appreciate and perceive this is not the inmates running the asylum, and if they make complaints that they will be investigated in a timely and effective fashion, and [if appropriate] proper redress will be given” Caruana declared. “It [the LSRA] has got to have credibility from birth.”

Conduct code

According to Caruana, “there are more than 20 cases in the pipeline ranging from the “unmeritorious ones to complaints that may be meritorious, but relate to completely unimportant matters, to the more important things”.

Also coming into effect under the Law Services Act 2017, being progressively enacted, is a new Code of Conduct for lawyers based on the New Zealand model (where there is also a fused profession allowing solicitors and barristers to attend the Supreme Court). He declared: “Why reinvent the wheel”?

The LSRA chairman, explained: “The new Code will more clearly and explicitly set out what most prudent lawyers probably would be adhering to already. It’s not that lawyers have to behave to a different standard. It is a more robust, tighter and better system for the legal profession and for consumers in the sense that it is resourced, with a dedicated, properly funded regulator that should respond more quickly and efficiently.”

Melo Triay, senior partner of Triay & Triay (T&T), first promoted changes to lawyers’ regulation in 2012 when chairman of the former Bar Council. “It is something that we have needed since the profession became so big”, he said. “Under the old system, law firms had to, interalia, comply with the Solicitors Accounts Rules and file an annual report certified by an auditor that said the client account was properly managed with client money kept separate from the firm’s. Complying with these rules and obtaining professional Indemnity insurance cover would result in the issue of practicing certificates; it was the minimum form of regulation”, Triay explained.

“Now we expect the Regulator to be more ‘hands on’ and not so dependent on whether a client makes a complaint or not. Previously, when complaints were made they were dealt with by the Admissions and Disciplinary Committee, which operated on a pro bono voluntary basis; it was inherently cumbersome and a little slow – hopefully, under the new system complaints will be dealt with effectively and expeditiously!”

Marcus Killick, chief executive officer at ISOLAS, noted: “The LSRA changes will be evolutionary and incremental. Bringing the legal profession into the same standing as auditors, financial services and gaming companies, with a degree of regulatory oversight, is beneficial to the jurisdiction. It will give clients a greater feeling of protection and encourage law firms to move further in the direction of treating their clients fairly.”

Changing status

He suggested all regulators spend 80% of time dealing with 10% of licence holders, “who may occasionally lapse”. However, the importance of a regulator to in-house counsel was less clear-cut, Killick felt, “because they effectively acted for a single client, rather than a multiplicity of clients as with law firms”.

ISOLAS morphed in 2017 from a traditional partnership into a Limited Liability Partnership (LLP), mirroring the set-up at most English law firms, which “has been good for us: the business discipline and feel that being a limited partnership brings to a legal practice” tended to draw the 13 partners more closely together, he maintained.

T&T last summer became one of very few law firms locally to transform its partnership into a limited company as allowed under new LSRA rules, which bought welcome limited liability and taxation benefits, Triay observed.

Hassans, Gibraltar’s largest law firm celebrates its 80th anniversary this year and has also formed a limited company, but is delaying implementing changes to its organizational structure until the LSRA comes fully into force.

Ian Felice, a Hassans partner in the corporate and commercial team, confirmed: “Limited liability is a strong driver when you have joint and several liability personally under a partnership, because the larger one gets the greater the potential exposure.” The firm, with 92 fee earners, including 38 active partners, in September consolidated four offices around the Rock into over 5,000 m2 on seven floors at Madison, part of the new Midtown development.

Felice revealed his firm’s business “grew around 5.5% in 2018-19, despite seeing the bubble of excitement in the fintech field reversing the expected big growth seen a year earlier.

Yet there remains a solid workflow from that sector and we are advising on four new Distributed Ledger Technology (DLT) enterprises and four token sales projects, making 17 Initial Coin Offering (ICO) enterprises handled so far.”

Felice who recently assisted Vietnamese-based, Rooke Investments, to purchase the Gibraltar interests of Danish-owned, Jyske Bank, reported: “Probably over two thirds of our work has an international dimension – working with clients that are international in nature and on work that doesn’t have a Gibraltar element.”

Commercial and residential real estate work had been “very busy and remains our bedrock, as well as private client and commercial structuring work.” Fellow tax partner, Grahame Jackson, disclosed: “We have seen a substantial increase in queries from private clients in relation to their tax position since the introduction of the Spanish/UK (including Gibraltar) Tax Treaty and also the Double Taxation Agreement with UK and we have held seven seminars on this subject attended by over 500 people.”

Work widening

Income at ISOLAS in 2018-19 had seen “low double digit growth – 10-15% up in a year” – with strongest areas being in DLT and commercial transaction-based work, “including gaming, where there has been considerable activity, and in property which shows no sign of abating”, Killick declared.

He detected that despite warnings from government, industry and trade bodies a number of firms did not recognise exactly what was required under EU-wide GDPR (General Data Protection Regulation), which became law a year ago. “For some firms it has increased costs – people did not want to spend the money, or decided to put it off for as long as possible.”

Michael Nahon, Hassans’ GDPR expert, recounted a surge in work and was “beginning to see bigger fines across the board for privacy failures, which only serves to emphasise the importance of compliance with GDPR. It is especially true in a digital market where trust is an essential component of doing business electronically.”

T&T business is “steady year on year and very similar to the past 3-4 years”, declared Triay, adding: “Business is tough in these uncertain times, so I regard maintenance of last year’s levels as acceptable and in some cases might be actual growth. Commercial, property and private client work play “a significant part, but also litigation is a big aspect. There is always litigation in Gibraltar and there are big trust, commercial and negligence cases currently going on”, Triay intimated.

Andrew Cardona, a specialist personal injury and medical negligence barrister at Phillips, a medium-sized nine-lawyer firm, concurs. “We are growing steadily, adding one lawyer each year to the team,” he said. However, as a committee member of the former Bar Council he’s concerned at “the situation that has been happening quite a lot over a long time, where cases in Gibraltar, on Gibraltar law, being not only led by English counsel, but also by English solicitors – and they are not regulated”.

From spring however, English lawyers will also need to be registered with the LSRA. “It’s not a matter of protectionism, but a matter of regulation”, Cardona insists. “Part of the problem is with smaller firms that may not have senior advocates of their own: instead of instructing local advocates, they may look elsewhere and it may be in part due to fear of losing their clients.”

UK and other EEA counsel can visit Gibraltar for specific cases and be called to the local Bar ad hoc, but from May they must be registered with the LSRA: six or seven overseas QCs have obtained permanent access.

No closed door

Caruana wants the LSRA “to consider the extent to which there is recourse to barristers from the UK and the extent to which that is having an adverse effect on the development of advocacy in the local Bar, and whether there is anything that should and could be done.

“On the one hand the case can easily be made that people should be free to bring in specialist counsel if they want to, but on the other we have to be sure that we are not thereby making it so easy and commonplace that local lawyers – young and old – are not able to cut their teeth so that eventually, the advocacy Bar in Gibraltar would simply die on its feet, becoming just part of the UK,” he held.

Small countries had faced similar access issues, but “very few have the open door policy that we still have”, Caruana observed. [In the Channel Islands for example, only locally qualified solicitors and advocates can appear in the courts.] “It’s not a question of shutting the door, but it is a question of regulating and permitting access in a way that does not kill the local Bar for the future”, Caruana opined.

Even so, Triay pronounced that because legal work in Gibraltar is so varied, practitioners tend not to specialise and “the level of knowledge is necessarily less in specialist fields: it naturally results in London Silks being instructed for complicated or other cases requiring a degree of expert specialization; it is impossible to be a specialist or expert in everything”.

Briefs review

Two barristers were appointed Silks last summer – Nigel Feetham, a Hassans partner specialising in insurance, was only the second non-litigator to become a QC and Christian Rocca, who early in 2019 became Gibraltar’s first Director of Public Prosecutions in charge of the day-to day running of the Criminal Prosecution Service.

But that fourth QC ceremony since 2011 raised another issue – how many Silks there should be – when Chief Justice Anthony Dudley, declared a limit of 24 QCs on the Rock had been reached, given that no more than 10% of lawyers in private practice can be appointed! He called for a “measured and constructive debate” on whether the rules remained appropriate.

Doyen of Gibraltar’s legal community, 90 years old Louis W Triay, QC, is believed to be the oldest practising lawyer in the world and is founder and now consultant at the jurisdiction’s fourth largest law firm, TSN (formerly Triay, Stagnetto, Nash), where he specialises in trust and tax law.

“There is a view that in a fused profession and with senior partners of some of our law firms not being litigators, they too should be able to become QCs,” Caruana noted. “I believe it should be only for practicing court lawyers, yet I see the force of those who say that you can’t appoint QCs as a percentage of all lawyers – whether they go to court or not – and then only appoint that percentage that go to court: it’s polemic.”

Foremost authority

Barristers and solicitors wishing to practice in Gibraltar must first attend a 24 week, part-time Professional Certificate of Competence in Gibraltar Law course to ensure understanding of differences from English law. The 23 students on the current course bring the total to 95 since November 2015.

Gibraltar’s lawyers gained an unexpected work boost last summer when Port and Law Enforcement agencies detained a crude oil super tanker, the Grace 1, on the grounds it was believed to be acting in breach of EU sanctions against Syria. A day earlier (“rather fortuitously” as a local barrister remarked), the Gibraltar government published an enforcement Notice against the vessel and its cargo under the Sanctions Act Shipping Regulations. The Act, prepared by the government Law Office, came into force in March, but was instigated as part of BREXIT preparations.

After six weeks of diplomacy and international legal wrangling and with Triay & Triay representing the Attorney General (AG) Michael Llamas, at the Supreme Court, Gibraltar’s Chief Minister, Fabian Picardo, received assurances from Iran and the owners of the oil that the released tanker and its cargo would not be taken to Syria; the vessel departed under the changed name, Adrian Darya, (however, media reports suggest that after some weeks, the cargo was eventually off-loaded to Iran)!

Nevertheless, as a result of the Grace I incident, the jurisdiction has become the foremost EU authority on implementation of sanctions-busting legislation. As pointed out by the AG at the opening in November of the 2019-20 Legal Year: “Our jurisdiction came under the international spotlight like few times before. It was a truly intense month. We upheld the rule of law in difficult circumstances.” Hassans acted for the Captain of the Port and Phillips for two of the ship’s crew.

Gender focus

Llamas added: “The Grace 1 served as a further reminder of the importance of our geographical location and the exposure it gives us to world affairs of the highest order. It is one of the reasons why the Government has continued to pursue its programme for the enactment of legislation in the area of security.”

As part of International Women’s Day in March, Hassans held an event attended by 100 clients and staff, including Samantha Sacramento, Equalities Minister and [since the November General Election] also Minister for Justice, to discuss diversity, inclusion and general equality issues. She told Gibraltar International: “Gender equality is a new phenomenon in Gibraltar for the past few years and that has been a contributory factor to getting the conversation going and people feeling empowered to recognise situations that may not be fair and then doing something about it.”

Whilst in government, Sacramento, a qualified barrister, who has not practiced for six years, admitted there were comparatively few female lawyers – “just look around” [59 of 245 lawyers listed on Gibraltar Courts Service website] – and she said while information gathered last year on the gender pay gap identified all within organisations having more than 20 employees, “next time, I expect it to be broken down into professions and common work positions”.

Gibraltar’s most senior female lawyer is Gillian Guzman, a Hassans Partner specialising in employment law, who was appointed the first female QC in 2014 and aged 39 years, she was then also the jurisdiction’s youngest Silk.

Minister for Justice and legislative authority for the three years prior to standing down at the recent general election, Neil Costa, in October returned to private practice and joined ISOLAS litigation and dispute resolution team.

The post LSRA to bring client benefit appeared first on Gibraltar International Magazine.

By Melo Triay and the Private Client Team, Triay and Triay

Following the recent signing of a Tax Treaty between the United Kingdom and Spain, individuals, companies, trusts, foundations and other legal structures/entities resident in or established and managed in Gibraltar with connections to Spain should consider their potential liability to taxation.

Aside from dealing with issues of tax residency and where tax is payable, the Treaty provides for enhanced administrative cooperation and exchange of information. Beneficially, it provides that persons should not end up paying taxes both in Spain and Gibraltar.

Under the Treaty, tax residency in Spain is determined for the taxable period starting, or if there are no taxable periods, to cover any charge to tax arising, on or after the Treaty takes legal effect. The Treaty will come into force once internal procedures in Spain have been completed.

Individuals

The Treaty does not change an individual’s existing tax liability under Spanish Law for previous tax years.

A non-Spanish national who spends one year in Spain or a Gibraltarian who spends four years in Spain, who moves to Gibraltar, will not lose their tax residency in Spain

and will continue to pay tax in Spain that tax year and for the following four tax years.

A Spanish national who moves to Gibraltar on or after the 4th March 2019 will pay tax in Spain continuously.

If you are paying tax in Gibraltar from employment or self-employment and are tax resident in Spain, then currently Spain gives unilateral tax relief to the amount of tax paid in Gibraltar, but you are fully taxable in Spain under Spanish law on all income and assets worldwide.

Under the Treaty, whilst residency is determined according to the laws of Spain or Gibraltar, certain provisions determine residency in the event of “… tax residency conflicts”.

A ‘residency’ conflict is not defined, so one may be ignited, for example, by Spain deciding, on reasonable grounds, that someone is Spanish tax resident. Once this happens that person is presumed to be resident in Spain unless he/she proves the contrary.

The two Treaty provisions which determine an individuals tax residency status, where he/she is said to be resident in both Spain and Gibraltar are: first, residency for 183 days in Spain by the individual or spouse, secondly, any time spent away from Spain or Gibraltar is added to where one has spent most time.

If there is a conflict, tax residency in Spain may also be triggered by only having a permanent home at one’s disposal in Spain or where two thirds of one’s direct or indirect net assets are located in Spain.

Companies or trusts

Companies or trusts established and managed in Gibraltar or governed by Gibraltar law will be resident in Spain when:

(a) the majority of its direct or indirect assets are in or are rights that can be exercised in Spain;

(b) the majority of its annual income derives from Spanish sources;

(c) the majority of individuals effectively managing the business are Spanish tax residents; or

(d) the majority interest in capital, equity or profit-sharing rights are directly or indirectly controlled by Spanish tax resident individuals or linked to companies or trusts linked to Spanish tax residents.

Those included in (c) and (d) above are not affected if the Company existed before

16 November 2018 and the following conditions were satisfied as at 31 December 2018:

(e) the Company has a fixed place in Gibraltar from which the whole or part of the business is carried on and an adequate number of qualified employees and operating expenditure; and

(f) the Company pays Corporation Tax in Gibraltar; and

(g) more than 75% of its income for its prior financial year accrues in and derives from Gibraltar; and

(h) in its prior financial year, its income or that of any Gibraltar related party sourced in Spain is less than:

(i) 5% if its annual turnover exceeds €6 million;

(ii) 10% if its annual turnover is between €3 million and €6 million; or

(iii) 15% if its annual turnover does not exceed €3 million.

Any Spanish company or trust whose residency is moved to Gibraltar after the Treaty takes effect will indefinitely be considered tax resident in Spain irrespective of that change of residency.

Companies or trusts that are tax resident in Spain are taxable in Spain under Spanish law on worldwide income and assets. If these are paying tax in Gibraltar, then there are circumstances in which Spain will give unilateral tax relief to the amount of any tax paid in Gibraltar, but these are fully taxable throughout that period in Spain on all income and assets worldwide.

Cooperation and transparency

Succinctly, there is full exchange of information and administrative cooperation in matters related to taxes and enforcement of taxes between Spain and Gibraltar. The Treaty requires “an enhanced administrative cooperation … with a view to exchanging information that is foreseeably relevant to the administration, enforcement and collection …” of all taxes.

All current and future EU provisions engaging mutual administrative assistance on exchange of information and wider cooperation and assisting in the recovery of taxes and duties will have full force and effect beyond Brexit.

The OECD and Council of Europe’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters (which is law already in Gibraltar) apply, additionally, any future OECD and G20 standards will be applied.

A liaison body, to be established by Spain and the UK (in the context of the Treaty), is obliged to provide mutual assistance whether a person is resident or non-resident in either Spain or Gibraltar, without qualification under the Treaty.

Co-operation will include automatic or on request exchange, participation in tax examinations, collection and preservation and service or transfer of documents.

There will be automatic exchange of:

♦ annual information, within four months of the end of each calendar year, on workers in each jurisdiction registered as resident in the other, with the first exchange backdated to 1 January 2014 and due within four months of the Treaty entering into force. A worker includes any individual employed and/or carrying on a trade, business, profession or vocation in Gibraltar, who is resident within 80 kms from Gibraltar, and, vice versa, employed or operating within 80 kms of Gibraltar;

♦ Six-monthly information, including ownership, licence plate, value and acquisition date, on 31 March and 30 September, on vessels, aircraft and motor vehicles registered in each jurisdiction relating to residents of the other, with the first exchange backdated to 1 January 2014.

The following will apply as between Gibraltar in favour of Spain:

♦ free access to the Companies Registry and Gibraltar Land Registry as required by EU Law;

♦ direct access to public information or information held by the Commissioner of Income Tax, for taxable periods commencing with or charges of tax on or after 1 January 2011, on

◊ beneficial ownership of companies and foundations;

◊ settlors, trustees, beneficiaries, assets of all trusts or other legal structures established or managed in or governed by the law of Gibraltar, if these persons are Spanish tax resident or the assets are in Spain.

Conclusion

Those who have connections with Spain should act quickly to ease the possible longer- term effects of the Treaty. The provisions dealing with when the Treaty takes effect may provide a window to organise one’s affairs. Although there is no mention on the face of the Treaty, political declarations have been made to the effect that once the Treaty has been operating for a while, then Gibraltar will be removed by Spain from its list of tax havens.

The post UK and Spain Tax Treaty and how it affects Gibraltar appeared first on Gibraltar International Magazine.

Avoiding the reality and perception of conflicts of interest

By Marcus Killick, Chief Executive Officer, Isolas LLP

Recently the UK media have debated, at some length, the appointment of Sir David Green, former director of the Serious Fraud Office, to a new job at the law firm Slaughter and May, given that Slaughter and May represented some of the biggest companies that Sir David prosecuted during his six years as head of the Fraud Office.

Sir David had to wait six months (which is common practice) from leaving his role in the public service. He also had to wait for approval from the Advisory Committee on Business Appointments which vets the suitability of new jobs for former senior civil servants and ministers.

Despite all the above Slaughter and May still announced that Sir David effectively had been ring-fenced at the law firm, which he is joining as a consultant, after concerns were raised over his new role, namely, that there was a risk that his new job could lead to conflicts of interest.

The process now followed in the UK is designed as much to prevent the perception of conflict, as the reality. It came about as a result of a perceived “revolving door” where senior public figures left their role to turn up on the boards of the very firms they had been negotiating with, taking action against or giving contracts to. Few seriously believed that these people may have acted in an inappropriate way to secure their new appointment but anything that left a perception that they might have done debased both the individual and the organization they previously worked for.

Six months time period

Having the requirement for independent approval removes that risk as does the imposition of a six month gap.

Six months is, by itself a compromise. It is wrong to deny an individual the right to continue to work after they leave (and it is logical that their future employment will be linked to the skills they have built up during their working life, including in their previous role). However it does allow their knowledge of specific ongoing matters to become dated. I was subject to this six month rule when I left the FSC although this was reduced to four and a half as I was asked to stay six weeks after my agreed leave date because my successor was unable to start then. My predecessor had been subject to a 12 month prohibition. The work restriction during this period is, by necessity, wide, as conflicts are not always apparent on day 1.

Conflicts of interest are not simply an issue for former public servants, Non-Executive Directors (NEDs), given their enhanced role in recent years, are increasing having to consider the possibility of such conflicts and how to deal with them. NED contracts for services now normally contain clauses prohibiting an NED taking a similar role with a competing firm and often require approval of subsequent board appointments.

Overboarding

Conflict must also be seen far wider than simply the risk that an individual may learn something on one board which would be commercially advantageous to another board they sit on. Two key conflict issues are time and the ability to properly perform all your expected duties.

In respect of time, regulators have become increasingly concerned about the concept of “overboarding”. This is where an NED assumes too many roles with the resultant risk that they cannot devote sufficient time to each to enable them to conduct their fiduciary role properly. Indeed MiFID II has specific requirements and restrictions over this. These requirements are even stricter where an individual is already the CEO of a licensed entity. Whilst such a proscriptive approach is less than ideal as no account is taken of the size of the entities or their activities, the message is clear, such possible conflicts of time interest must be considered by all NEDs. Furthermore, as the level of an NEDS work is not consistent, the time available must allow for peaks and not just a steady state.

The ability to perform your full range of duties is another matter an NED must consider. Traditionally, one way for an NED to manage a conflict is to stand aside from the matter over which the conflict exists. For example, not participating in a credit decision where the potential borrower is linked. Recusing on a case by case basis is effective and is vital in a small jurisdiction such as Gibraltar where such situations are not uncommon.

Chronic conflict

Of more difficulty is “chronic” conflict. Here the conflict manifests itself on a permanent basis and is not restricted to a single client or counterparty. An NED is a director of the board, the board covers the entire activities of the business. If an NED has to recuse themself from a material part of the board’s considerations on an ongoing basis then it has to be questioned whether they can truly perform their role properly. The company may justifiably question the extent to which such a hampering of the board member in their ability to perform their duties renders them unsuitable to continue and the need for them to be replaced by someone who can. Such an impairment is inconceivable for an executive director, it should be no more acceptable for an NED.

The above two matters are vital but are not the only considerations. They are however unique as they defy the standard approach of disclosing an interest and managing it accordingly with board support. Furthermore they are not covered by standard confidentiality clauses, as confidentiality is not the issue.

As such, and particularly for NEDs on the boards of licensed entities, they must now be material considerations. Regulators have become increasingly focused on the role of NEDs who have never been more vulnerable to sanction if something goes wrong. It is difficult seeing a large level of sympathy resulting from an excuse from the NED that they didn’t have time or had precluded themselves from playing their full fiduciary role because of their other activities.

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