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 disclosures;
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) Ordinance 1989.
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 ownership chain;
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.
Gibraltar To Offer Foundations Tuesday 4/4/2017Gibraltar's Parliament recently passed a bill permitting the establishment of Private Foundations.