By James Lasry, Partner, Deputy Head of Financial Services, and Wayne Fortunato, Partner, Deputy Head of Trusts, Hassans International Law Firm
In an ever-evolving landscape of international finance, Gibraltar has long been regarded as a strategic hub and jurisdiction of stability and security. Known for its robust regulatory framework and attractive tax environment, Gibraltar has cultivated a reputation as a global financial centre and become a premier destination for individuals and corporations seeking to protect and grow their wealth. Among the many financial tools available, Private Trust Companies (PTCs) in Gibraltar have gained prominence as versatile vehicles for the preservation and management of assets.
A Trusted Legacy
Gibraltar has a rich history as a financial centre, and its trust industry is testament to its enduring legacy. Trusts are intricate legal arrangements that allow individuals, families, and businesses to separate the ownership and control of assets and play a crucial role in estate planning, wealth preservation, and facilitating the efficient transfer of assets to future generations. Gibraltar’s trust sector, bolstered by a robust legal framework, has consistently attracted high-net-worth individuals and families seeking a safe harbour for their wealth.
The Evolution of Private Trust Companies
Within the wider history of Gibraltar trusts, the introduction of PTCs through the Private Trust Companies Act 2015 represent a relatively recent addition to Gibraltar’s financial toolkit. PTCs offer a unique advantage by granting the settlor (the person establishing the trust) a vehicle through which greater control over the management of the trust and investment decisions can be maintained. This increased level of control is particularly attractive to families with complex asset portfolios and specific preferences regarding the management of those assets. In a traditional trust structure, a professional corporate trustee is entrusted to oversee the trust’s assets and provide a degree of impartiality and level of expertise to the management of the assets of the trust. However, in certain instances, the settlor’s vision for the management of the trust may require a more bespoke arrangement which a PTC would allow. Through the incorporation of a PTC to act as trustee of their trust, a settlor is able to have a greater degree of input and control over the management of the affairs of the trust and maintain a more direct influence over their settled wealth’s direction.
In order to be registered as a PTC in Gibraltar a company must either be incorporated under the Companies Act 2014 as a private company limited by shares, a private company limited by guarantee (having or not having a share capital), a private unlimited company, or, have established domicile in Gibraltar under Part XIII of the Companies Act 2014 and Part I of the Companies (Re-Domiciliation) Regulations 1996.
Companies registered as PTCs in Gibraltar must ensure that, at all times, they have a Registered Administrator in appointment who holds a valid Class VII or Class VIII Licence and registered office in Gibraltar and that the PTC shall not solicit Trust Business or carry on any business other than Connected Trust Business or carry on Connected Trust Business in respect of anyone other than the Designated Individual, or carry on any activity other than its Connected Trust Business or any activity incidental to its Connected Trust Business.
Benefits and Uses of Gibraltar PTCs
The versatility of Gibraltar PTCs allows for them to be tailored to meet the specific needs and preferences of clients wishing to take advantage of Gibraltar’s offering, factoring in benefits and uses which include:
1. Robust Regulatory Framework
Gibraltar is a common law jurisdiction renowned for its rigorous financial regulations and robust regulatory environment which instil confidence in investors and maintains the jurisdiction’s reputation as a reliable financial centre. The Judicial Committee of the Privy Council in London is the highest Court of Appeal for Gibraltar and hears appeals from the Gibraltar Court of Appeal. The trust industry in Gibraltar is overseen by the Gibraltar Financial Services Commission who ensure that PTCs adhere to these stringent compliance standards.
2. Tax Efficiency
Gibraltar boasts a favourable tax regime that can significantly benefit trusts and their beneficiaries. There are no taxes on wealth, inheritance, or capital gains in Gibraltar, which makes it an attractive location for managing assets within a trust structure, especially for those seeking to minimize tax liabilities.
3. Expertise and Services
Gibraltar has a well-established network of professional service providers, including lawyers, accountants, and financial advisors, who are experienced in trust and estate planning matters. This expertise ensures that PTCs in Gibraltar are able to receive top-tier support and guidance.
4. Family Wealth Management
PTCs are often utilised by high-net-worth individuals as a means of centralising control and management of their settled assets, which may include investments, real estate, and family-owned businesses, and enable them to ensure that their settled wealth is preserved and passed down to future generations according to their wishes.
5. Corporate Holding Structures
Businesses can also benefit from the protection and continuity afforded by PTCs in Gibraltar, with trusts being used as holding structures for shares in various companies, facilitating efficient management and succession planning.
6. Philanthropic Initiatives
For those who may be more committed towards philanthropy, PTCs can play a crucial role in managing charitable foundations and trusts, where Gibraltar’s favourable tax environment could enhance the impact of their philanthropic initiatives.
7. Asset Protection
Gibraltar’s PTCs can also be employed to shield assets from potential risks and liabilities. By placing assets within a trust structure, individuals and businesses can add a layer of protection to their settled wealth from legal claims and financial challenges.
Conclusion
Gibraltar’s Private Trust Companies offer a powerful tool for the preservation and strategic management of wealth. With a robust regulatory framework, tax advantages, and a reputation for stability and expertise, Gibraltar has emerged as a prominent destination for individuals, families and businesses seeking to establish PTCs. Whether it’s for family wealth management, corporate holding structures, philanthropic initiatives, or asset protection, Gibraltar’s PTCs provide a flexible and reliable solution which can be tailored to the unique needs of each client.
In an ever-changing financial landscape, Gibraltar stands as a guardian of trust and security, preserving wealth for generations to come.