Gibraltar in the EU and its time zone (convenient for investors; managers; and Board Meetings) offers flexible company, unit trust and limited partnership (LP) fund structures as a good alternative funds domicile to Luxembourg and Ireland in particular for hedge funds, private equity funds and real estate funds.
Gibraltar is within scope of EU parent subsidiary and interest & royalty directives which can be beneficial for private equity and real estate fund structures: dividend income from relevant EU/non EU participants exempt from tax; capital gains and withholding tax breaks. It is possible to set up open-ended (securities hedge funds), closed-ended (private equity funds) and protected cell companies (which segregate liability between sub funds), LPs including the use of a Gibraltar based general partner of an English Limited Partnership and unit trusts.
A fund manager can set up UCITS falling within UCITS IV which can passport its activities to other EU member states and Non-UCITS retail funds or an Experienced Investor Fund (EIF). EIFs are available for professional and/or experienced investors including HNWI or HNW vehicle (EUR 1 million in net assets) in comparison to Luxembourg SICAV SIFs and Dublin QIFs. EIF can be self managed and no licensed investment manager is required which can be costly and time consuming to set up in many other jurisdictions; requires 2 Gibraltar resident directors authorised by the Financial Services Commission; authorised Gibraltar based administrator; and FSC authorised custodian for open-ended funds. A further advantage of an EIF is that it can have investment managers and custodian.
Attention is drawn in an adjacent briefing on upcoming amendments to the UK Reporting Fund regime on retail and professional only funds. EIFs can now, subject to eligible conditions, come within these favourable amendments enabling treatment as an investment fund under the HMRC white list on financial strategies in contrast to trading.
Looking to the fund management side a company set up in Gibraltar is subject to tax at a flat rate of 10% on income accruing in and derived from local sources but exempt from on its offshore profits which may be beneficial to real estate fund structures.