Over the years, Gibraltar has transitioned into an ´onshore` financial center, complete with signing Tax Exchange Information Agreements with major global economies and being white-listed by the OECD. In addition, Gibraltar has successfully built and maintained a controlled and regulated business environment. The cautious and guarded approach fostered in Gibraltar has proven mission-critical for the jurisdiction.
When visiting Gibraltar, the investment business service providers and the regulator can be visited all in one day. Gibraltar’s closely controlled environment is central to its business model. Participants in Gibraltar’s investment and funds business work to protect the reputation and integrity of their business, and by doing so, create an environment that allows for controlled growth.
Gibraltar’s funds and investments infrastructure has developed over the past decade. During this time Gibraltar has become home to a broad spectrum of domestic and international companies, including banks, fund administrators, accountants, investment managers, stock brokers, company managers, auditors and lawyers who comprise Gibraltar’s fund services industry.
Approximately 95 experienced investor funds have been established in Gibraltar since the Financial Services (Experienced Investor Funds) Regulations 2005 came into effect in August 2005, half of which have been structured as protected cell companies. This represents an increase of 5 funds from the figure reported last year.
The Government introduced new Financial Services (Experienced Investor Fund) Regulations in 2012. The new Regulations allow large funds to use reputable and substantial administrators based in jurisdictions of equivalent standing to Gibraltar.
The new Regulations also allow funds to redomicile to Gibraltar yet continue to use their existing reputable administrator, representing a significant advantage for funds moving to the EU with, inter alia, the advent of the Alternative Investment Funds Managers Directive (AFIMD) which was implemented in July 2013.
The Government supports joint initiatives with the Gibraltar Funds and Investment Association (GFIA). Gibraltar transposed the AIFMD and remains determined to hone its product range so as to become even more attractive for Swiss asset managers to consider using Gibraltar in various ways.
Advantageous and flexible legislation for funds
Gibraltar has emerged as a popular alternative jurisdiction for investment funds and their managers, offering robust fund legislation, favourable tax advantages within an EU framework, efficient regulation, the flexibility of a small jurisdiction, quality infrastructure and European ´passporting rights` for investment firms.
Firms regulated to provide investment advisory or management services under MiFID are able to passport their services into other EU jurisdictions under their license. Gibraltar firms have enjoyed passporting rights in respect of investment services for several years. This enables providers of investment services to operate in other EEA member states based on the authorisation granted to them locally by the FSC. While this is the case for similar managers domiciled in other European territories, the low cost and low tax environment of Gibraltar, which is EU-compliant and supported by established brand name service providers, presents a compelling alternative.
One of the attractions of Gibraltar as a fund domicile is that no regulatory approval is required before a fund can begin to raise capital and commence with its investment activities. Gibraltar is a unique jurisdiction where a fund may be launched based on a legal opinion that confirms the fund has met all legal and structural requirements for its operations, and provided that the fund´s documentation is submitted to the regulator for registration within ten business days of its launch.
Factors attracting newly established funds to the jurisdiction: the fiscally effective legislative framework for funds and managers, combined with high regulatory standards, economic stability, accessibility, Mediterranean climate, European time zone and the high quality professional services infrastructure.
Market size and volume of work worth
The financial sector accounts for 15% of total employment (300 people) and contributes around 20% to GDP (approximately $377.4 billion).
Gibraltar’s financial services centre continues to post stable growth in a number of areas such as insurance, investment management, and funds, notably experienced investor funds, of which there are now approximately 95. Gibraltar’s future in financial services continues to rest on high-end, high-value-added private client business, insurance (captive and retail), investment management and funds.
Gibraltar´s objective for the new decade is to become a major player as an EU funds domicile and EU centre for hedge funds management operations particularly with the transposition in July 2013 of the Alternative Investment Funds Managers Directive.