Gibraltar
Legal
Country code – GI
Legal basis – Common law
Legal framework – Trustee Act
Formal name – Trust
Settlor – The Settlors are the persons placing the assets into the Trust Settlement. If so instructed, the first Trustees can declare the Settlement, in which case the Settlors will not be named.
The settlor may also be the beneficiary of the assets and may, subject to certain provisions, retain control of the trust. There may be limited protection from a subsequent bankruptcy after assets are gifted to the trust.
In the case of an asset protection trust, it will not be void or voidable in the event of the Settlor's bankruptcy or liquidation thus achieving asset protection from creditors.
Trustee – Trustees are natural or legal persons who hold the title to the assets and manage the trust, but they cannot benefit from it.
There is no requirement for the Trustee to be resident in Gibraltar. Custodian trustees are not permitted.
Beneficiaries – Beneficiaries are those who get benefit from the trust. The Settlor may also be named as the Beneficiary.
There are no specific provisions to prevent beneficiaries from draining the trust of its assets and spending in a thrifty way. Trusts in Gibraltar allows avoiding both probate and forced heirship rules.
Protector – A protector is not mandatory, but may be appointed by the Settlor. The function of the Protector is to supervise the Trustee, thus providing additional assurances to the Settlor that the trust assets are properly managed. The Protector may have the power to remove or replace the Trustee.
Disclosure - Gibraltar provides confidentiality, as there are no registration requirements and therefore the details of the Settlor and Beneficiaries are not disclosed to any person other than the Trustee.
Protection from foreign judgments – The Trusts Law does not provide provisions to ignore and not enforce judgments. The Hague Convention on Trusts applies in Gibraltar.
Protection from creditors – The Trusts law repeals the Statute of Elizabeth, so transfers by the settlor to the trust may not be set aside if the settlor transferred the property before the debt arose. The creditor must prove the fraudulent transfer of assets to the trust, which is not clearly defined by the law. Creditors’ claims may not be brought jointly. If a fraudulent transfer is proven, trust may not be declared invalid.
An asset protection trust may be set aside by its creditors if it is proven to the satisfaction of a Gibraltar court that the trust was made by the settlor with the intent to defraud its creditors.
Protection for immigrant trusts – Trusts that migrate from other jurisdictions do not benefit from retroactive protection.
Community property – Community properties transferred to a Gibraltar trust may not retain its community property character.
Exclusion of foreign law - There are limited exclusions in the legislation to be able to exclude foreign law.
Choice of law – The choice of law of Gibraltar to govern the trust or a particular aspect of that trust, is valid, effective and conclusive regardless of any other circumstances.
Duration - The maximum duration of a Gibraltar trust is 100 years.
Compliance – Registration of a trust in Gibraltar is voluntary, except for Asset protection trusts, which are also subject to a to a registration fee.
A trustee shall keep accurate accounts and records of the trustee’s trusteeship.
There are no reporting requirements for a trust in Gibraltar, provided that all beneficiaries are resident outside Gibraltar and no asset situated in Gibraltar is held.
- Settlor as a beneficiary
- Bankruptcy protection
- Ignore foreign judgements
- Hague convention on trusts
- Choice of law is binding
- Protection from immigrant trusts
- Community property provisions
- Custodian trustee permitted
- Rule against perpetuities (years)
- Limited Specific exclusion of foreign law
- Subject to CL rules Settlor can retain control
Protection of Settlor
Protection from foreign judgements
- Avoidance of forced heirship
- Spendthrift provisions
- Exclusion of Statute of Elizabeth laws
- Trust invalid if transfer fraudulent
- Creditor must prove fraudulent transfer
- Clear definition of fraudulent transfers
- Separation of creditor claims
- Statutory limitation on fraudulent transfer
Protection of Beneficiary
Transfers
Taxes
A trust established in Gibraltar may not be subject to local taxes applicable to the assets and income of the trust, provided that no residents of Gibraltar benefit from the trust and no physical assets are located there.
It must be noted that the choice of law of the trust would not be applicable to tax matters, which would be governed by the respective jurisdiction where the settlor, beneficiaries, assets or trustee are located, as applicable.
You should consult with your tax advisor or accountant to know the tax implications in your jurisdiction of residence when establishing a trust in Gibraltar, transfer assets to it and receive profits from said assets.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- 0% Offshore Income Tax Rate
- 12.5% Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 0% Interests Withholding Tax Rate
- 0% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- Indefinitely Losses carryforward (years)
- 10.00% Social Security Employee
- 20.00% Social Security Employer
- 28% Personal Income Tax Rate
- 0% VAT Rate
- 0 Tax Treaties
Country details
Gibraltar is a British overseas territory located at the southern tip of the Iberian Peninsula, east of the Bay of Algeciras, and extends over the geological formation of the rock of Gibraltar, bordering Spain and communicating the Mediterranean Sea and the Atlantic Ocean. It has a population of 33,000 inhabitants in an area of less than 7 sq. km.
Its official language is English and its official currency is the Gibraltar Pound (GIP), pegged to – and exchangeable with – the British pound sterling at par value.
The central bank controlling the GIP, with the responsibility of minting coins and printing notes, is the Government of Gibraltar.
As a British Overseas Territory, Gibraltar has a governor, appointed by the monarch of the United Kingdom, who works as a representative of Her Majesty's Government.
The governor is responsible for security in the territory and representation between the territory and the British Government; Also dissolves the legislature and acts to enforce the laws.
The Government of Gibraltar is elected for a term of four years. The unicameral Parliament currently consists of seventeen elected members. The head of the chamber is appointed by a resolution of the Parliament. The head of government is the Chief Minister.
Gibraltar is part of the European Union (EU) although with a special status. Being a British overseas territory, the UK is in charge of foreign affairs and business affairs.
According to the Treaty of Accession of the United Kingdom to the European Economic Community (EEC) in 1973, Gibraltar entered the EEC as a 'European territory whose external relations the UK Government is responsible'.
Gibraltar is the only European territory enjoying this status in the European Union. In the Brexit referendum, its population voted mainly in favor of staying in the European Union.
As negotiated by the UK at the request of the Gibraltar government, some EU laws do not extend to Gibraltar. According to several provisions of the Treaty of Accession of the United Kingdom to the European communities, Gibraltar:
- It is outside the customs union of the EU.
- It is excluded from the Common Agricultural Policy (CAP).
- It is excluded from the harmonization of VAT.
- It does not allocate any part of the customs revenue to the EU.
Its economic activity is conditioned by its physical limitations and the lack of open land, which make agriculture non-existent.
It maintains a small amount of light industry for domestic consumption such as beverages. The main sources of income are on shipping, tourism, financial services, and the Internet.
In recent years there has been a significant expansion of hotel facilities to stimulate tourism. The port facilities occupy most of the western shore of the territory, as well as a portion of land gained to the sea in the bay of Algeciras.
In 1998, Gibraltar developed a tax law that made it an active offshore financial center and currently boasts a broad offer of banks, investment banks, insurance companies, credit card companies, consumer finance companies, government-sponsored enterprises, and stock brokerages.
Gibraltar has become a center for Internet gaming companies. All gaming operations in Gibraltar require licensing under the Gambling Act of 2005. Despite the difficulties in obtaining these licenses, there are currently several operating in the Rock, some of which are among the world’s largest.
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