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) Regulations 2006.
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; and
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 (as beneficiaries).
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.
Gibraltar To Offer Foundations Tuesday 4/4/2017Gibraltar's Parliament recently passed a bill permitting the establishment of Private Foundations.