Gibraltar sees opportunity in upcoming AIFMD implementation
Gilbert Licudi, minister for Financial Services in Gibraltar, has added his voice to those from across the asset management and professional services sectors in the jurisdiction arguing that it has significant opportunity in the roll out of new European regulations such as the AIFMD.
A key driver of these opportunities is in Gibraltar’s Experienced Investor Funds (EIF) Regulations, which Licudi said will make it easier for alternative funds to relocate to the British overseas territory.
“The regulations open up a new line of business for Gibraltar,” he said at a presentation by the Gibraltar Funds & Investments Association (GFIA).
“They are particularly important in the context of the possible relocation of funds to Europe with the advent of the Alternative Investment Fund Managers Directive, which is due to come in next year.”
“We have also introduced this year, following discussions with the Gibraltar Association of Pension Fund Administrators, amendments to the Income Tax Act which will allow overseas pension schemes, or QROPS, to be transferred to Gibraltar.”
Other law and regulations are due to be amended or introduced in the territory, which should further increase its attractiveness to fund managers, Licudi said. These include a new Companies Act, and legislation to attract private client work through trust structuring. This would include provisions on private trust companies, purpose trusts, an extension of the perpetuity period, and the introduction of foundations and the possibility to avoid forced heirship.
Joseph Caruana, partner at Deloitte in Gibraltar, commenting on the EIF Regulations said that it offered key advantages that some other jurisdictions had stepped away from, such as the ability to launch before notifying the Financial Services Commission, the local regulator, as long as the manager obtained the legal opinion from senior counsel in Gibraltar – Luxembourg used to allow a delay between launch and notification to the local regulator, but no longer. Custody and administration requirements are also meant to be flexible, for example, enabling use of foreign based administrators.
Once based in Gibraltar, both managers and investors gain from very low tax rates relative to other European jurisdictions. Overall, the local industry has been increasingly switching from being a servicing centre to offering full domiciliation services, said James Lasry, partner and head of Funds at Hassans law firm as well as chairman of GFIA.
He said that the reliance on common law principles in the territory similar to those in England was an advantage when considering the impact of the AIFMD. This is because domestic legislation is similar to the way such law works in the British Virgin Islands and Cayman Islands, which could argue for an easier onshoring of products currently domiciled there.
And the territory maintains other advantages, Lasry added, such as a claimed “fastest time to market” in the EU because of the close nature of the relationship between industry and government, and regulations such as EIF.
Investors based in other EU jurisdictions such as Switzerland or Germany would feel comfortable with the similarities to English law in terms of contracts, thus also positioning the territory for further growth, the both Lasry and Licudi suggested.
Licudi added that he expected more QROPS to develop in the territory given its adoption of new legislation to facilitate this type of business. Qualifying Recognised Overseas Pension Schemes are a way for UK taxpayers to move their pensions out of UK jurisdiction if they move permanently to another jurisdiction, without incurring a tax penalty.