Offshore Trusts Report: Gibraltar
Legislation, Regulation and Supervision
Gibraltar's asset protection trust legislation has traditionally
fallen under the provisions of the Bankruptcy Amendment Ordinance
1990. This is unusual for offshore asset protection, which is dealt
with under the law on fraudulent conveyancing laws in most offshore
jurisdictions, as for instance in the Cayman Islands and the Bahamas.
For a settlor to avail himself of the protection
of the Bankruptcy (Amendment) Ordinance 1990 each transfer to
the trust must be registered. Prior or subsequent unregistered
transfers are not protected by this Act. Registration of settlements
is regulated by the Bankruptcy (Register Dispositions) Regulation
(99v) which permit registration only if:
Disclosure forms approved by the Financial Development Secretary
have been completed by the settlor and approved by the trustee;
The trustee has reviewed the public records to substantiate
The settlor has executed an affidavit of solvency; and
The trustee is in compliance with the legal licensing requirements
of the Financial Services (Investment and Fiduciary Services)
The provisions in Gibraltar are attractive to many settlors
because they permit the equivalent of an "advance ruling" prior
to committing the actual transfer to the trust. Fraudulent conveyancing
laws depend for their effect on the statutory definition of 'intent'
to defraud. By contrast, under bankruptcy law, which contains
no definition of intent, the only direct action which can be commenced
is a bankruptcy proceeding, which has a significantly tighter
test of intent.
For a bankruptcy proceeding to succeed, it is necessary to show
that the target (the settlor) is resident or domiciled in the
jurisdiction, and that an 'act of bankruptcy' was committed there.
Since most asset protection trusts are settled via exempt companies,
whose owner (= the settlor) cannot be resident and a beneficiary,
this will be difficult or impossible in many cases.
Trustees, if they are not already members of the
accounting or legal professions, must be licensed by the Financial
Services Commission, which applies a number of criteria to determining
whether a person or a company is 'fit and proper' to have a license.
Gibraltar has signed Tax Information Exchange Agreements
(TIEAs) with the USA, Ireland, Germany, New Zealand, Denmark and
Australia. More TIEAs are expected as the territory seeks to comply
with the OECD's standard on tax transparency.
The agreement provides for full exchange of information
on civil and criminal tax matters between the two jurisdictions
on request. It is wide ranging and includes:
information regarding the ownership of companies, partnerships,
trusts, foundations, "Anstalten" and other persons,
including ownership information on all such persons in an
in the case of trusts, information on settlors, trustees,
beneficiaries, and protectors; and
in the case of foundations, information on founders, members
of the foundation council, and beneficiaries.