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Editorial Comment
Making the most of what exists
Providing direct financial services’ access to the UK through Gibraltar sounds such a basic concept, it’s a wonder that no-one thought to highlight the advantage before, given that around
90% of the territory’s business already is UK-facing. Now a bilateral ‘passport’ offer on services to the UK is to be at the forefront of The Rock’s promotion in the world market after it came as a surprise to many that passporting financial services into the UK was only as a result of EU open access rules. With Brexit talks looming, Gibraltar’s first, and most critical initiative, has been to ensure Britain provides
unchanged access for its businesses. That ‘gateway to the UK’ approach is being delivered at funds,
private client and other conferences in Europe and the UK: it could be beneficial in terms of cost and timescale for European firms seeking to access the UK to establish an operation in Gibraltar, and for some UK firms to relocate to the territory as has been demonstrated by the numbers of British eGaming and insurance entities now trading from The Rock.
Gibraltar business with other parts of the EU is relatively small – measured by the number and extent of ‘passports’ issued by the Financial Services Commission (FSC) - though some eGaming firms have extensive international and EU involvement having gained separate licenses in individual countries rather than from any EU open access policy.
Gibraltar insurance entities with significant continental European business will be considering contingency plans – opening up in Malta, Luxembourg or Ireland most likely – but they will almost certainly remain firmly rooted on The Rock to take advantage of the generally accepted
lower cost base in employment, support services and personal taxation, capped at 25%, with attractive £100pm social security cost, together being well below the UK and almost all of Europe.
Corporation Tax, although at 10% compared to 17% in the UK (and probably falling), where the taxable sum legitimately can be massaged down to help close the gap, is not seen as such a big ‘pull’ these days. Considerable efforts to attract business from South Africa and Hong Kong, for example, have been predicated on Gibraltar being the stepping stone into Europe, so a re-sell proposition will need to be developed, something Financial Services Minister Albert Isola expects to have in place when British Prime Minister Theresa May formally activates the Brexit process next March.
Clearly, Gibraltar cannot arbitrage regulatory levels, as that would be seen as impacting on the high standards already adopted and the positive reputation gained as a result. Proving this point, intervention by the regulator last summer safeguarded some 14,000 motor and other Enterprise Insurance policyholders in Ireland, France, Italy, Greece, Norway and the UK, when the FSC discovered capital reserves were insufficient and provisional liquidation has resulted.
The Chamber of Commerce, feels Gibraltar should up its game so that post-Brexit it is seen as “an efficient, service and business friendly jurisdiction in areas such as public services and ease of doing business”.
In the meantime, in direct response to demand from ex-pats with young families, Prior Park, part of a UK group, opened in September with 60 pupils as Gibraltar’s first private senior school: it is expected to cater for 240 youngsters within two years. Ray Spencer
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Contents
News p6
Recasting Gibraltar’s appeal to encourage business opportunities
Funds p8
Gibraltar Funds: The National Private Placement Regime lives on
Money p10
The rise of the FinTech industry
Nov/Dec/Jan 2016/17
Volume 22/ Number 4
Insurance p12
Surprise insurance sector growth extends appeal
Profile p16
Top financial services lawyer ponders political comeback
Insurance p22
BREXIT: the Impact on EU Insurers’ Passporting rights and the potential Gibraltar opportunity
Law p26
Association of European Lawyers AGM at the Sunborn Hotel
Business round up p28