Overview of Gibraltar’s fund industry
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. The combination of Gibraltar’s accessibility, European time zone, UK standard infrastructure, low crime rate as well as its Mediterranean climate and lifestyle, has positioned Gibraltar as a particularly attractive jurisdiction for investment funds and their managers.
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 firms, including banks, fund administrators, accountants, investment managers, stock brokers, corporate service providers, auditors and lawyers who together comprise Gibraltar’s fund services industry. Gibraltar also presents political and economic stability, a professional workforce trained to UK standards and full employment rights for EU/EEA and Swiss citizens.
The Government of Gibraltar has been a consistent supporter of the domestic funds and investments industry since the early years of the industry’s inception. The Government has adopted a commercial and user-friendly approach, often partnering with industry in presenting the jurisdiction to international fund practitioners. Government support has helped position Gibraltar at the forefront of dynamic innovation in the sector and as one of Europe’s premier jurisdictions for the establishment and operation of alternative investment funds.
Gibraltar’s financial services sector, which includes the fund and investment industry, is regulated by the Financial Services Commission (FSC) which was established in 1991. The FSC regulates the administration and promotion of registered collective investment schemes and has a department that deals solely with the supervision of funds. The FSC maintains high regulatory standards and, whilst modelled on the UK’s Financial Conduct Authority, it also benefits from the flexibility inherent in a small jurisdiction. Entities regulated in Gibraltar are able to work directly with the regulator when the need arises.
As a member of the European Union, Gibraltar benefits from EU Directives such as MiFID, Parent Subsidiary Directive (PSD), the Interest and Royalties Directive (IRD), UCITS Directive and AIFMD. Firms regulated to provide investment advisory or management services under MiFID are able to passport their services into other EU jurisdictions under their Gibraltar 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 in Gibraltar by the FSC. While this is the case for similar managers domiciled in other European territories, Gibraltar’s EU-compliant low cost and low tax environment, supported by established brand name service providers, presents a compelling opportunity for the informed fund manager.
Gibraltar’s tax laws are central to its position as a thriving fund domicile. A new Gibraltar tax regime, launched in January 2011, has maintained the previous status quo such that any income received by a Gibraltar fund which is accrued and derived outside of Gibraltar will not be taxed in Gibraltar. This tax regime has now brought Gibraltar in-line with modern onshore financial centres.
Gibraltar’s flexible funds legislation provides for a variety of fund products, ranging from small unregulated private schemes to regulated professional funds for experienced investors and UCITS retail funds.
A significant step forward in Gibraltar’s development as a fund domicile jurisdiction was the introduction of the Experienced Investor Fund (EIF) regime in 2005. The popularity of the EIF has been an important contributing factor to the advancement of Gibraltar’s 1012 fund industry. A revised EIF regime was introduced in 2012 to build on the progress achieved through the previous legislation. EIFs currently established in Gibraltar are a diverse assortment of open-ended and closed-ended funds with asset classes ranging from standard tradable securities to property, private equity, venture capital, fund of funds and other alternative investment classes.
Over the past decade the funds industry in Gibraltar has matured considerably, drawing on experience from international clients and professionals, as well as developing substantial home-grown expertise. Investment funds are today one of the pillars of Gibraltar’s finance sector, along with insurance, banking and private client services. Gibraltar’s size and the seamless Zommunication between industry, the regulator andGovernment, have enabled it to develop into what is arguably the premier experienced fund regime in Europe and certainly the regime with the greatest flexibility and fastest time to market, presenting a healthy balance between flexibility on the one hand and investor protection on the other.
Gibraltar presents a unique offering to funds and their managers:
- Established EU jurisdiction for a wide range of investment funds
- Well-developed fund regime, including UCITS, Experienced Investor Funds and private funds
- High supervisory standards, supported by an approachable regulatory environment for fund managers
- Unique offering for asset managers, combining quality of life with fiscal and legislative stability
- Fully AIFMD and MiFID compliant, with passorting rights across the EU
- Professional and internationally recognized fund and investment expertise
- Specialist jurisdiction for European master feeder fund solutions