Gibraltar’s Parliament has approved a bill that will enable trust advisers and others in the jurisdiction to set up private foundations on behalf of their clients.
The bill permitting the establishment of such foundations was passed as part of what is referred to as “consequential amendments to the Income Tax (2010) Act”, and follows an industry consultation on the matter.
Efforts to establish the foundations legislation have been under way for some time in Gibraltar, led by wealth management professionals in the territory. Other major financial services jurisdictions, such as Jersey, the Isle of Man and Guernsey, have introduced their own foundations legislation since 2008.
Foundations are seen as appealing to investors from countries with a civil law tradition, such as France and certain countries in the Middle East, who are often unfamiliar with trusts and in particular, their concept of the separation of legal and beneficial ownership.
In a statement on Friday, Gibraltar commerce minister Albert Isola, pictured left, acknowledged the “considerable amount of work undertaken by a number of private sector practitioners to get to this successful conclusion”, and said that in addition to this, there had also been “significant further involvement by the public sector and wider private sector financial services community in participating in an extensive consultation process”.
“Private foundations have long been on the wish list of those professionals who advise their clients in complex financial engineering, and I am grateful to the STEP [Society of Trust and Estate Practitioners] organisation in Gibraltar for lobbying for this legislation over a number of years,” Isola added.
“It offers [Gibraltar financial services firms] a platform to create new business opportunities, and adds to the strength of the Gibraltar proposition as a leading transparent and compliant onshore financial services jurisdiction in Europe.
“It also fulfils this government’s commitment to create an excellent suite of private client legislation.
“Our research tells us that there is international demand for this product and our ability to serve clients with this legislation continues to promote our financial services industry very positively.”
Like a trust
As noted above, foundations are often compared to trusts, but are sometimes described as being more like a company than a trust, except that they have no shareholders, and their powers are exercied by a council.
Before 2009, when Jersey established its first foundations, they were mainly found in Panama and Liechtenstein. The Cayman Islands is also seeking to introduce legislation allowing for the creation of foundations.
To read more about the Gibraltar legislation on the Gibraltar government’s legisation website, click here.