Gib tweaks (some) regs to accommodate financial services businesses
Like most jurisdictions that place a high value on their financial services sectors – reflecting the industry’s importance to their local economy – Gibraltar is constantly fine-tuning its regulations to accommodate its wealth managers, trust companies, insurers and related businesses.
With this in mind, as reported here last week, it’s added private foundations to its toolbox of options for wealth managers in the jurisdiction.
Like the foundation regulations recently introduced in a number of other jurisdictions – including Jersey, Guernsey and the Isle of Man – Gibraltar’s new foundation regs will give Gibraltar’s wealth managers a structure with asset protection features that is often described as being like a trust for investors from countries with a civil law tradition, such as France and certain countries in the Middle East.
Before 2009, when Jersey established its first foundations, they were mainly found in Panama and Liechtenstein. The Cayman Islands is among the jurisdictions that don’t yet have foundations but which are currently seeking to introduce legislation allowing for them.
Also relatively new to Gibraltar’s regulatory books, meanwhile, is a Limited Liability Partnership Law, introduced last March. The law, which was drafted in consultation with the trust and estate practitioners’ body, STEP, combines the benefits of limited liability and a partnership.
It has a separate “legal personality”, with the partners sharing and paying taxes on the profits as well as being responsible for the debts, but only on their share in the partnership, according to those familiar with the new law.
Financial services minister Albert Isola said that the law was designed mainly for professional services providers, but it can be used by any partnership providing a trade or service.
“An LLP is regarded as tax transparent, therefore members can arrange management functions without forfeiting their limited liability protection,” he said.
There must be at least two partners in the arrangement, and the partnership must be registered, although details of the agreement are not made available to the public.
‘No’ to ROPS industry
While accommodating wealth managers with a regulatory regime that helps them to facilitate their business and compete with other jurisdictions is a priority for Gibraltar’s officials, they recently surprised pension transfer industry practitioners by deciding not to drop a rule that permits no more than 30% of a UK pension transferred to Gib to be taken tax-free.
Gibraltar is a popular destination for pension transfers, and many industry observers had expected that it would permit so-called “flexible access” of pensions.
The government explained that it opted for a conservative approach in order that the jurisdiction’s status as a pension transfer destination not be jeopardised, at a time when the UK has been cracking down on countries that it believes fail to meet its expectations for the way pensions should be managed, in order to ensure the funds will be used to provide a pension income for life.
As reported, HM Revenue & Customs removed the last US ROP scheme from its online list last month, adding that country to the list of countries to which UK pensions may no longer be transferred. Others recently removed from the list include Italy, France and Canada.