Offshore Trusts Report: Gibraltar
Legal Framework And Formation Rules and Fees
Trust management, particularly for wealthy UK individuals,
has been a traditional business for Gibraltar. Successive tightenings
of UK anti-avoidance legislation have reduced the possibilities
for UK citizens, but trust work continues to be significant; many
Collective Investment Funds are of course based on Trusts.
The basic law of trusts is contained in the Gibraltar
Trustee Ordinance, which is virtually a copy of English trust legislation.
Gibraltarian legislation affecting trusts also includes the Perpetuities
and Accumulations Ordinance, the Trustee Investments Ordinance,
the Bankruptcy Ordinance and the Trusts (Recognition) Ordinance,
and the Financial Services (Conduct of Fiduciary Services Business)
Appeal is to the Privy Council.
The Hague Convention has been implemented, but there
are no provisions for the exclusion of foreign inheritance laws
or for the nonrecogition of foreign judgements. Under the Bankruptcy
Ordinance there is statutory protection against creditors for asset
protection trusts, providing the settlor is an individual, and was
not insolvent at the time of the disposition, nor became so as a
result of it.
Trust documents are in English, and there
are no requirements for registration except that Asset Protection
Trusts must be registered with the Registrar of Dispositions. The
normal perpetuity period of a Gibraltar trust is 100 years.
There are no restrictions on the accumulation of income
during the perpetuity period. Legislation has not yet been introduced
to provide for purpose trusts.
There is no stamp duty. Trust income is exempt from
tax under the Income Tax (Allowances, Deductions and Exemptions)
Rules 1992 if:
the trust is created by or on behalf of a non-resident person;
the income either accrues or is derived outside Gibraltar,
or in the case of income received by a trust would, if it
had been received directly by the beneficiary, not be liable
to tax under the Income Tax Ordinance; and
except in the case of a trust created before 1/7/83, the
terms of the trust expressly exclude residents of Gibraltar
NB: Interest income received from a Gibraltar bank
is normally exempt from taxation, although the introduction of the
European Savings Tax Directive in 2005 has affected this.