One of the greatest barriers to the effectiveness of blockchain regulation can sometimes be the perception that there is an unwillingness on the part of regulatory authorities and governments
to ensure that regulation is built around a sound understanding of the industry and its needs. Developing an understanding of the technology is a critical aspect of developing confidence in the framework that any government builds, however these frameworks are then firmly enforced by the regulator themselves, in effect, enforcing a policy that we set as a government.

In Gibraltar, we realised early on that in order to attract the best firms in the industry, we needed to have a comprehensive regulatory framework. However, input from the industry itself was crucial in creating a framework that was fit for purpose and served our key objectives. Our motivation to introduce the framework centred around the opportunities we believed would accrue to
the jurisdiction in attracting industry leaders to Gibraltar.

There are very few jurisdictions or bodies around the world that have developed an all-encompassing regulatory and legal framework for the Blockchain and Distributed Ledger Technology (DLT) industry. In particular, a set of rules that promote innovation whilst providing the required levels of risk management and oversight.

Initially there was reticence given major concerns around the safety and longevity of the industry. There followed a period in which the industry was considered too small, even insignificant, when compared with traditional financial services to be of concern. Views are evolving and developing and perhaps, some may say, a more responsible and proactive attitude is being displayed. Gibraltar introduced its framework on the first of January 2018, which in an industry that moves as quickly as crypto, is quite some time ago. More recently we have seen moves by, for example, the EU Commission, to introduce “EU-wide rules for blockchain to avoid legal and regulatory fragmentation”. The EU intends to achieve this through the Markets in Crypto- Assets Regulation (MiCA).

The European Central Bank

Interestingly, one element that is driving this base change in attitude is the opportunity of introducing sovereign digital currencies, a change that some see as moving from a remote possibility to an ambition. In October 2021 the US Federal Reserve announced plans to “review the potential benefits and risks of issuing a U.S. digital currency, as central banks around the world experiment with the potential new form of money.” The European Central Bank stated in June 2021, that it “and the European Commission services are jointly reviewing a broad range of policy, legal and technical questions relating to the possible introduction of a digital Euro. “ The digital yuan introduced by the Chinese government is reported by a senior Chinese Central Bank figure, as of October 2021, to have led to some “140 million people opening wallets” and “using them for transactions totalling around 62 billion yuan ($9.7 billion)”.

Resting on our laurels is not an option, we need to continue to develop our proposition across all the commercial areas that we are active in. The DLT regulatory framework will become 10 core principles adding the 10th which centres around regulating market integrity, which will again be the first of its kind for virtual asset service providers. It is incredibly important for us to keep at the cutting edge of regulation in this and other sectors and build upon the work we have carried out so far. I am also pleased that we announced in December 2021 a forward-thinking collaboration, alongside IOVLabs, the team behind the RSK blockchain and leading South American crypto exchange Bitso, who are licensed in Gibraltar. This collaboration will result in the Government of Gibraltar integrating blockchain technology into our legacy systems in order to streamline government processes. It is envisioned that the implementation, which will initially be rolled out on a pilot basis, will improve the delivery of public services to individuals and organisations residing or operating in Gibraltar.

eGov system

This proposed blockchain solution will enable citizens of Gibraltar to store government-issued and certified credentials on the blockchain, building upon our eGov system. Our government has developed a close working relationship with both Bitso and IOVLabs over time. Working hand in hand with the private sector has made this possible at this stage. The implementation of blockchain technology into our processes will further improve the way in which our community interacts with the government.

This integration represents the fact that the jurisdiction itself benefits from working with the private sector, highlighting innovation that spurs from collaboration. While we are pleased to have reached this point, we have not done it alone: it has been a partnership between the public and the private sector. We are delighted to have successfully positioned ourselves as a forward-thinking jurisdiction for innovative businesses developing and offering blockchain-related solutions.

The post What motivates change in the development of the digital world? appeared first on Gibraltar International Magazine.

Pursuant to section 3A(2) of the Income Tax Act 2010 (the “Act”) (which requires the Minster, by notice in the Gazette, to publish the texts of International Tax Agreements), the Income Tax Act 2010 International Agreement (Spain) Notice 2021 was published which replicates the text of the Treaty. The Income Tax Act 2010 Notice of Amendment of Schedule 12 (Spain) was also published to amend Schedule 12 of the Act (which lists all of Gibraltar’s International Tax Agreements) to include the Treaty. Gibraltar now has two International Tax Agreements– with the United Kingdom and Spain.

The Treaty aims to clarify the tax position of individuals and entities resident for tax purposes in both Gibraltar and Spain, and subsequently help to regulate relations between the two jurisdictions. Under the Treaty, individuals will continue to be tax resident in Spain or Gibraltar in accordance with their domestic law. However, those with dual residency are not exempt from tax residence in Spain if certain criteria are met. For more information on this visit: https://www.gibraltarlawyers.com/uploads/PDF/ISOLAS_Tax_Agreement.pdf 

Although the text of the Treaty has been replicated into the Act, the Treaty itself shall only enter into force once both parties have given notice that they have completed their respective internal respective ratification procedures, and shall take effect under the provisions of Article 2 for taxable periods commencing on or after the date of entry into force of the Treaty.

The automatic exchange of information on workers registered with the Gibraltar Income Tax Office as residents in Spain, and vessels, aircraft and motor vehicles registered in Gibraltar relating to tax residents in Spain, and vice versa, will be retrospective, commencing on or after 1 January 2014.

In respect of any other exchange of information not mentioned above, the taxable periods will commence on or after 1 January 2011 or where there are no taxable periods, for all charges to tax arising on or after 1 January 2011.

In addition to the above, the International Agreements on Taxation Matters (Spain) Regulations 2021 (the “Regulations”) were also published, which came into effect on the date of publication. The Regulations have effect for and are in connection with the implementation of the Treaty and, in particular, to enable the Commissioner of Income Tax to provide the Spanish tax authorities with relevant information, as set out in the Treaty.

The Regulations also gives effect to Article 3(2) of the Treaty by making provision equivalent to –

(a) Council Directive (EU) 2015/2376 of 8 December 2015 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation (“DAC 3”); and

(b) Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (“DAC 6”).

DAC 3 provides for the mandatory automatic exchange of information on advance cross-border tax rulings and advance pricing arrangements.

DAC 6 introduces mandatory disclosure rules for intermediaries (and in some cases taxpayers) in respect of cross-border arrangements that exhibit certain “hallmarks”.

DAC 6 had previously been replaced with the European Union Mandatory Disclosure Regime (“MDR”) under Gibraltar law, but has now been re-introduced (although only in relation to arrangements between Gibraltar and Spain).

For further information please contact Emma Lejeune emma.lejeune@isolas.gi; Adrian Pilcher adrian.pilcher@isolas.gi; or Stuart Dalmedo stuart.dalmedo@isolas.gi.

Legal Disclaimer

Please note that the information and any commentary on the law or otherwise contained in this article is only intended as a general statement and is provided for information purposes and not for the purposes of providing legal advice. No action should be taken in reliance on it without specific legal advice. Every reasonable effort is made to make the information and commentary accurate and up to date, but no responsibility for its accuracy and correctness, or for any consequence of relying on it, is assumed by the author and/or ISOLAS LLP.

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ISOLAS LLP consultant Jamie Trinidad has co-edited a book on the 2019 Chagos Advisory Opinion of the International Court of Justice, published recently by Cambridge University Press.

The contributions to this book examine the Court’s reasoning, the importance of the decision for the international system, and its consequences for the situation in the Chagos Archipelago (or “British Indian Ocean Territory”) in particular.

Jamie, a fellow, tutor and director of studies in law at Wolfson College, University of Cambridge, fellow of the Lauterpacht Centre for International Law, and practising barrister, said:

“The ICJ’s Chagos Advisory Opinion has important implications, not least for the law of decolonisation, self-determination, territory, jurisdiction and state responsibility. My co-editor (Prof. Thomas Burri) and I thought it would be a good idea to gather together a collection of essays on various aspects of the Advisory Opinion in a single edited volume, which will hopefully serve as a valuable resource for people who are interested in the case. We’re thrilled that it’s finally out in print.”

Find the new volume by clicking here.

The post THE INTERNATIONAL COURT OF JUSTICE AND DECOLONISATION, CO-EDITED BY ISOLAS CONSULTANT JAMIE TRINIDAD appeared first on Gibraltar International Magazine.

ISOLAS Partners Adrian Pilcher and Joey Garcia, and Associate Michael Adamberry have assisted Her Majesty’s Government of Gibraltar (“HMGoG”), the National Coordinator for Anti-Money Laundering and the Combatting of Terrorist Financing (“National Coordinator”) and the Gibraltar Financial Services Commission (“GFSC”) in the drafting of the following pieces of legislation:

• Proceeds of Crime Act 2015 (Amendment) Regulations 2021 (“POCA Amending Regs”)
• Proceeds of Crime Act 2015 (Relevant Financial Business) (Registration) Regulations 2021 (“RFBR Regs”)
• Financial Services (Specified Regulatory Decisions) (Amendment) Regulations 2021 (“SRD Amending Regs”)
• Proceeds of Crime Act 2015 (Transfer of Virtual Assets) Regulations 2021 (“TR Regs”)

This work follows from Adrian and Michael’s recent involvement with drafting the Proceeds of Crime (Miscellaneous Amendments) Act 2021 passed by the Gibraltar Parliament on 5 February 2021 (and which came into force on 9 February 2021). The drafting team has had a further opportunity to work as part of a dedicated taskforce guided by the National Coordinator and the GFSC, making further amendments to Gibraltar’s legislation related to anti-money laundering (“AML”), combatting financing of terrorism (“CFT”), and counter-proliferation financing (“CPF”) otherwise known as AML/CFT and CPF. Additionally, ISOLAS Partner Joey Garcia was also called upon for his expertise in the Fintech and distributed ledger technology (“DLT”) space. Joey Garcia was involved following the gap analysis he had been instructed to conduct in relation to Gibraltar’s DLT Framework and the FATF Recommendations, and VASP definitions.

The changes brought about by the above pieces of legislation, in part, deal with the implementation of the so-called ‘travel rule’ prescribed under the revised Recommendation 15 (as read with Recommendation 16) of the Financial Action Task Force’s (FATF) Recommendations [1] on the International Standards on combatting money laundering and the financing of terrorism and proliferation, adopted by the FATF plenary in February 2012, as amended.

Travel Rule

The travel rule is essentially a requirement (derived from the FATF Recommendations) to collect and submit, immediately and by secure means, certain information along with transfers of virtual assets. In Gibraltar, these obligations are now placed on relevant financial businesses (RFBs), as defined in s.9 of the Proceeds of Crime Act 2015 (“POCA”), who send (on behalf of a “payer”) or receive (on behalf of a “payee”) virtual assets to or from “virtual asset service providers” or “VASPs”.

The TR Regs operate by obligating the RFB acting for the payer in a virtual asset transaction (which we can refer to as the “originator RFB” for simplicity) which has been captured by the TR, to obtain and submit certain information on the payer and on the payee. In many cases the RFB may already have information on the payer, as part of its customer due diligence (“CDD”) obligations under POCA which apply to regulated DLT firms in Gibraltar, as well as other RFBs. However, unless the payee is also one of its clients, the originator RFB is unlikely to have information relating to the payee and will therefore need to have the relevant industry systems in place which allow this information to be securely provided.

The RFB receiving the virtual assets on behalf of the payee (which we can refer to as the “beneficiary RFB” for simplicity) has the obligation to ensure it receives the required information from the originator RFB and then corroborate this with its own records in respect of the payee’s name and, where applicable, the payee’s account number.

The information-gathering requirements shift slightly depending on whether the RFB is acting on behalf or a payer, a payee, or both (as well as on its own behalf). However, regardless on whom the onus is to obtain, submit, or corroborate the information with their own records, virtual asset transfers covered by the TR Regs will be accompanied by the following specified information:

• the payee’s name;
• the payee’s virtual asset account number;
• the payer’s name;
• the payer’s virtual asset account number;
• where the payee or the payer does not have a virtual asset account number, a unique transaction identifier; and
• one of the following:
  • the payer’s address;
  • the payer’s national identity number;
  • the payer’s customer identification number; or
  • the payer’s date and place of birth.

RFBs also have to consider the obligations when they receive virtual asset transfers from a person other than a VASP (e.g. virtual assets received from an unhosted wallet). In such cases, the information they are expected to obtain from the payee is limited to:

• the payer’s name; and
• one of the following:
  • the payer’s address;
  • the payer’s national identity number;
  • the payer’s customer identification number; or
  • the payer’s date and place of birth.

However, the travel rule does not apply where the RFB sends a virtual asset transfer to a person other than a VASP. In this case there are no information gathering requirements, other than the usual CDD requirements that an RFB has to meet under POCA.

Given the overlap of travel rule information and CDD information obtained during the normal course of an RFB’s activities, the TR Regs make clear (r.6) that any requirement, under the TR Regs, for a RFB to obtain the information specified in r.4(2), or any part of it, shall constitute a CDD measure as if the requirement to obtain that information was listed in s.10 POCA. The record-keeping requirements under s.25 POCA are also applicable to information obtained when sending or receiving virtual asset transfers.

Virtual Assets and VASPs

Gibraltar has included a VASP definition which replicates the FATF definition of the same – this is contained in r.3 of the TR Regs. The only purpose of this definition is to define transactions between RFBs operating in Gibraltar and VASPs operating outside Gibraltar (and not therefore RFBs). Likewise, a definition of “virtual asset” is also used, which aligns with the FATF definition of the same – this concept is now defined in s.7 POCA and used in the TR Regs.

The concepts of VASP and virtual asset are intended to be self-contained to a large extent, and thereby do not substitute Gibraltar’s existing DLT framework, prescribed under the Financial Services Act 2019 (“FSA19”) and its subsidiary legislation and guidance (the “DLT Framework”). Gibraltar’s DLT Framework, in place since 2017, already captured most of the activity falling into the FATF’s classification of VASP activity. As a result of recent changes to POCA [2], a new s.9(1)(q) POCA now brings the following within the scope of that Act:

“(q) persons that, by way of business, exchange, or arrange or make arrangements with a view to the exchange of:

(a)          virtual assets for money;
(b)          money for virtual assets; or
(c)          one virtual asset for another.”

For the purposes of paragraph (q) above, “virtual assets” has the meaning given to in s.7 POCA as amended, and “money” has also been defined in a self-contained definition that applies for the purposes of s.9(1)(q). Under the revised s.9(1A) POCA, “money” means: “(a) money in sterling; (b) money in any other currency, or (c) money in any other medium of exchange, but does not include a virtual asset”.

As a result of these changes, VASP activity as classified by FATF now falls within s.9(1)(j), (p) and (q) POCA.

Other notable amendments

The occasional transactions threshold under which CDD needs to be carried out is reduced from 15,000 euro to 1,000 euro in the case of in the case of virtual asset transactions (newly inserted s.11(g) POCA), whether these are carried out as a single transaction or as several transactions which appear to be linked.

As a result of changes to s.30(3) POCA, persons convicted of a relevant offence under POCA (or their associates) will be prevented from holding a management function in, or being a beneficial owner of a broader category of RFBs in s.9 POCA, which now includes estate agents and letting agents (s.9(1)(h)), all controlled activities (s.9(1)(j), as read with FSA19), DLT firms involved in tokenised assets (s.9(1)(p)) and those persons that, by way of business, exchange, or arrange or make arrangements with a view to the exchange of− (a) virtual assets for money; (b) money for virtual assets; or (c) one virtual asset for another (s.9(1)(q)).

Under changes to s.25A POCA, RFBs must now factor in the impact of developing technologies (e.g.  virtual assets and DLT) for both new and existing products when they assess the risks of money laundering, terrorist financing and proliferation financing.

New registration requirements for four classes of RFB

The RFBR Regs impose an obligation on four classes of RFB, who are now required to register with the Gibraltar Financial Services Commission (“GFSC”) for the purposes of AML/CFT and CPF supervision, to the extent they are not already supervised.

The following RFBs must now apply for registration (with transitional arrangements for existing RFBs to apply within 3 months of the legislation coming into force):

• external accountants;
• tax advisors;
• undertakings that receive, whether on their own account or on behalf of another person, proceeds in any form from the sale of tokenised digital assets involving the use of DLT or a similar means of recording a digital representation of an asset; and
• persons that, by way of business, exchange, or arrange or make arrangements with a view to the exchange of− (a) virtual assets for money; (b) money for virtual assets; or (c) one virtual asset for another [3].

Failure to register is a criminal offence punishable with up to 2 years’ imprisonment and/or a fine.

The registration regime should not to be confused with any application for regulatory permissions required under FSA19, in respect of regulated activity defined under that Act. Such permissions would need to be sought if the RFB intends to carry out regulated activity.

Additionally, the registration requirements are not applicable where a person carrying out any of the above RFB activities is already subject to supervision by a supervisory authority, whether that supervisory authority is the GFSC, or any other supervisory authority specified in paragraphs (a) to (d) or (h) of Schedule 2 to POCA. As an example, an audit firm that is subject to GFSC oversight will not need to seek a separate registration for its accountancy practice.

The RFBR Regs also provide fitness and propriety criteria that the GFSC will need to consider when accepting or refusing registration (including the withdrawal of registration after it is granted).

Notably, these Regulations are only intended to make the GFSC responsible for supervision of the four classes of RFB within the context of AML/CFT and CPF systems and controls required under POCA, and do not therefore task the GFSC with the regulation and supervision of those RFBs in respect of their conduct of business, nor impose prudential and other regulatory requirements outside of this scope, as is the case with regulated activity under the FSA19.

New Specified Regulatory Decisions

The Financial Services (Specified Regulatory Decisions) Regulations 2020, which came into force last year, provided for certain decisions taken by the GFSC to be “specified regulatory decisions” within the meaning of s.24 FSA19. The SRD Amending Regs expand these further to include certain decisions made under the RFBR Regs as follows:

• the decision to issue a decision notice under R8(5) RFBR Regs, where the GFSC decides to refuse an application;
• the decision to issue a decision notice under R9(3) RFBR Regs, where the GFSC decides to suspend or cancel a person’s registration;
• the decision to suspend or cancel a person’s registration with immediate effect under R9(5) RFBR Regs; and
• the decision to publish information under R9(7) RFBR Regs in respect of any action taken under R9(3) or R9(5) of those Regulations.

The practical effect is that these decisions are now subject to the GFSC’s Decision Making Committee (“DMC”) processes. Notably, the DMC process is not invoked for positive registration considerations under the RFBR Regs.

Further guidance on the above changes has also provided by the National Coordinator [4].

Partner Adrian Pilcher commented: “We are pleased to have worked with industry and lawmakers once again on these latest developments in a dynamic space. The travel rule has been the subject of some controversy in many jurisdictions, given the limited amount technological solutions to facilitate the collection and submission of information, securely and immediately. We are particularly grateful to the Finance Centre, the National Coordinator, the GFSC and Government Law Offices, as well as Joey Garcia, whose previous work with industry and HMGoG in assessing the travel rule issues and its practical implementation has been pivotal to the drafting”.

Partner Joey Garcia commented: “Although most DLT businesses will have been aware of the original FATF recommendations relating to the Travel Rule, their transposition into law has been very fast. What needs to be understood is that a lot of work has gone into the requirements being introduced in the right way to meet the Recommendations, but to do so in as practical and industry conscious a way as possible. The practical transposition of the FATF Recommendations has in reality varied significantly from jurisdiction to jurisdiction and Gibraltar’s approach to this has been excellent. The GFSC have also been very open with the industry around the introduction of the requirements and the local GANT association has also already taken the training around the practical introduction of the systems required forward with the industry so I would see this as being as positive and constructive an approach as possible.”

ISOLAS LLP Partner, Adrian Pilcher, who specialises in private client, tax and financial services law, and Associate, Michael Adamberry, who specialises in Banking & Regulatory Services, AML and Data Protection, are available to advise further on AML/CFT and CPF matters. Contact Adrian on adrian.pilcher@isolas.gi or Michael on michael.adamberry@isolas.gi. Additionally, for specific queries on DLT, Fintech and travel rule implementation, contact Partner Joey Garcia, who is a recognised expert in this space: joey.garcia@isolas.gi.

________________________________

[1] Find the FATF Recommendations here: http://www.fatf-gafi.org/publications/fatfrecommendations/documents/fatf-recommendations.html

[2] Note that s.9(1)(q) and s.9(1A) POCA introduced by the POCA Amending Regs (defined above) have since seen further amendment via the Proceeds of Crime Act 2015 (Amendment No.2) Regulations 2021, published on 29 March 2021. The wording in this article reflects the latest wording as at 31 March 2021.

[3] Note that r.4 RFBR Regs (defined above) has been amended via the Proceeds of Crime Act 2015 (Relevant Financial Business) (Registration) (Amendment) Regulations 2021, published on 30 March 2021, so this aligns with the wording in s.9(1)(q) POCA, as amended. The wording in this article reflects the latest wording as at 31 March 2021.

[4] Find the National Coordinator Guidance here: https://www.gfiu.gov.gi/publications

The post ISOLAS LLP ASSISTS WITH THE DRAFTING OF FURTHER CHANGES TO THE PROCEEDS OF CRIME ACT 2015, INCLUDING LEGISLATION TO IMPLEMENT THE FATF ‘TRAVEL RULE’ IN GIBRALTAR appeared first on Gibraltar International Magazine.

Often referred to as ‘the gold-standard’, Chambers delivers insight and analysis on the global legal profession that is unrivalled in its reach and depth. The Guide ranks the leading lawyers and law firms in over 200 jurisdictions worldwide, across a spectrum of categories, spanning client service, commercial vision and business understanding, diligence, value for money and the depth of the team.

Individual lawyers are ranked in their practice area(s) based on their legal knowledge and experience, their ability, their effectiveness and their client service.

Noted for his work across financial services, corporate and trust law, Senior Partner Peter Isola is once more ranked as ‘Band 1’. Partners Mark Isola QC, Christian Hernandez, Samantha Grimes, Joey Garcia, and Steven Caetano have also maintained their high standard with a ‘Band 2’ ranking, with Partner Jonathan Garcia identified as ‘Up and Coming’. In addition to his general business law ranking, Christian Hernandez retains his ‘Spotlight Ranking’ in shipping law.

New to the rankings, Partner, Christian Caetano is recognised as ‘Up and Coming’ in General Business Law. Christian specialises in Insurance & Financial Services where, in addition to regulatory matters, he is regularly instructed on mergers and acquisitions of regulated entities. He is also frequently instructed on legislative drafting and advisory work.

Partner James Montado, previously identified as ‘Up and Coming’ in Dispute Resolution is now recognised as ‘Band 2’. James is described as a “very thorough lawyer who provides top advice to clients.” He frequently advises on insolvency disputes, as well as other contentious matters in the financial sector.

Described by Chambers and Partners as an “outstanding full-service firm”, ISOLAS has once again demonstrated their commitment to maintaining a high standard of business as they consistently achieve the top ranking, year on year.

Marcus Killick, CEO of the firm, commented: “I am delighted that ISOLAS LLP has once again achieved the Chambers and Partners top ranking, cementing its standard as a leading law firm. This has been achieved thanks in no small part to the diligent work ethic of the entire ISOLAS team. The team has successfully continued to assist new and existing clients throughout the pandemic with no loss of service.  I would like to congratulate our lawyers on their continued success, in particular Christian Caetano and James Montado in the well-deserved enhancement of their previous rankings, and thank our loyal clients, whose testimonials are a credit to the firm.”

View ISOLAS LLP’s Global Rankings here.

The post ISOLAS LLP Retains Chambers & Partners Global Top Ranking appeared first on Gibraltar International Magazine.

On 31 December 2020, a framework for a UK/EU Treaty on Gibraltar’s future relationship with the EU was proposed, cited as the New Year’s Eve ‘In-Principle’ Agreement (the “Agreement”). If ratified, this post-Brexit deal (the “Treaty”) for Gibraltar will address, among other things, the issue of unrestricted mobility of persons and goods between Gibraltar and the Schengen Area.

The next step will be a political instrument that will outline the basic understandings of the UK and Spain, in conjunction with Gibraltar, on the future relationship between Gibraltar, Spain, and the EU. These understandings will form the basis of the Treaty, which will remain in place for an initial four-year period. The Agreement stipulates that the process will only go ahead with permission from the UK and Gibraltar. As with Article 50, Gibraltar retains the right to withdraw this permission at any time and thereby end the Treaty.

The aim is for the Schengen Area to be extended to include Gibraltar. If this occurs physical barriers between Gibraltar and the Spain will be removed, providing unrestricted passage into Spain and the rest of the Schengen Area.

Gibraltar will not have a land border under the Treaty, but will have reinforced airport and seaport controls at its entry points, which would now be considered EU frontiers. Entry and exit through these points will only be permitted on completion of both Gibraltar and Schengen checks.

The Gibraltar authorities will be responsible for Gibraltar checks in regard to their own legislation, and for ensuring the legislation gives effect to these arrangements. As the neighbouring Schengen member state, Spain will be responsible for the implementation of Schengen’s relevant parts i.e., including Schengen checks, which will be carried out by Frontex.

The position regarding visas remains as it is now. Persons requiring a visa to enter Gibraltar pre-Treaty will still need one after the Treaty comes into force. UK nationals will not require a visa to enter Gibraltar or the Schengen Area.

Exercising jurisdiction over any person in Gibraltar will be the sole responsibility of Gibraltar Border & Customs Agency and law enforcement officials.

Although the detail is yet to be defined, the Agreement also seeks to address maximised and unrestricted mobility of goods between Gibraltar and the European Union. The subsequent freedom of movement will mean continued economic growth for Gibraltar and the surrounding area.

Ancillary matters including the environment, level playing field, social security coordination, citizen’s rights, data, and matters related to continued document recognition are also addressed in the Agreement.

The UK government will now send the Agreement to the European Commission in order to initiate negotiations on the formal Treaty.

For further information please contact Partners Emma Lejeune, emma.lejeune@isolas.gi or Adrian Pilcher, adrian.pilcher@isolas.gi

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As provided for in the Free Trade Agreement with the EU, HMRC earlier this month announced that the UK will now apply the OECD mandatory disclosure rules (“MDR”) in place of the DAC6 requirements. Following suit, Gibraltar has aligned its reporting requirements with MDR. On 21 January 2021, the Income Tax Act 2010 (Amendment) (EU Exit) Regulations 2021 (the “Regulations”) were published, which amends the Income Tax Act 2010 (the “Act”) by replacing the previous DAC 6 rules contained in the Act with MDR. The Regulations are deemed to have come into operation on 1 January 2021.

DAC6 requires EU intermediaries to file information on Reportable Cross Border Arrangements to their home tax authorities. The OECD MDR is narrower in its provisions, containing fewer reportable hallmarks.

Only arrangements falling under the Category D hallmarks of DAC6 fall within the OECD’s disclosure requirements. This category comprises the obscuring of beneficial ownership and arrangements which undermine the reporting requirements under the laws implementing Union legislation or any equivalent agreements on the automatic exchange of Financial Account information.

The first reporting date under the new model will be 30 January 2021, and reporting will be in compliance with the OECD MDR requirements as transposed into the Gibraltar legislation.

It should be noted however, that due to Gibraltar’s commitments under the ongoing UK/Spain Agreement regarding Gibraltar, reporting standards in respect of Spain may be realigned with the EU Directive standards in the future.

For further information on MDR please contact Emma Lejeune emma.lejeune@isolas.gi ; Adrian Pilcher adrian.pilcher@isolas.gi ; or Stuart Dalmdo stuart.dalmedo@isolas.gi 

The post GIBRALTAR TO REPLACE DAC 6 REPORTING REQUIREMENTS WITH OECD MODEL IN LINE WITH UK appeared first on Gibraltar International Magazine.

ISOLAS Partners Adrian Pilcher and Emma Lejeune, together with Senior Associate Stuart Dalmedo and Associate Giovanni Origo, have contributed to the Gibraltar chapter of the International Comparative Legal Guides (ICLG) Private Client 2021 guide.

The guide covers common issues in private client laws, including pre-entry tax planning; connection factors; taxation issues on inward investment; succession planning; trusts and foundations; immigration issues; and tax treaties, across 26 jurisdictions.

The Gibraltar chapter answers a number of key questions related to taxation issues and planning in Gibraltar, provides an overview of the implications of residency status on tax liability, and highlights opportunities for Gibraltar residents.

Gibraltar has an attractive tax regime, with no inheritance, capital gains, estate, gift or wealth taxes. The guide also offers further clarity on the various taxable sources of income, and taxation issues on inward investment.

Partner Adrian commented: We are pleased to have contributed to the ICLG’s Private Client guide, alongside specialists from twenty-six other jurisdictions. Gibraltar has long been an attractive choice for individuals and companies looking to relocate due to its favourable tax regime; we hope our chapter answers any queries on taxation, investment and planning in Gibraltar. Our experienced private client team are always on hand to offer further insight and assistance.

Partner Emma commented: As always, it is a pleasure to be able to contribute to such a prestigious guide. We hope our contribution provides a good understanding on Gibraltar’s private client sector and the advantages that the jurisdiction offers to individuals considering the Gibraltar proposition.

To view the Gibraltar chapter, visit https://iclg.com/practimailto:emma.lejeune@isolas.gice-areas/private-client-laws-and-regulations/gibraltar.

For further information related to the above, or for advice regarding tax planning within Gibraltar, contact Adrian Pilcher adrian.pilcher@isolas.gi or Emma Lejeune emma.lejeune@isolas.gi

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