When choosing where to establish an investment fund, the jurisdiction plays a pivotal role in shaping the fund’s operations, growth, and success. While well-known fund jurisdictions like the Cayman Islands often steal the spotlight, Gibraltar has emerged as a hidden gem, offering a compelling alternative for fund managers. With a strong regulatory framework, competitive advantages, and unique flexibility, Gibraltar is proving itself as a prime location for structuring funds, including those focusing on cutting-edge assets like cryptocurrency.
One of the most attractive aspects of Gibraltar is its simplicity. The jurisdiction offers two primary fund structures: regulated Experienced Investor Funds (EIFs) and unregulated private funds. Both options are straightforward, making them easy to understand and navigate for fund managers. This approach ensures that unnecessary complexity is avoided, allowing managers to focus on their core objectives: managing and growing their investments.
Speed to market is another key advantage. In Gibraltar, there is no regulatory downtime when launching an EIF. Unlike in many other jurisdictions, EIFs can be established based on a legal opinion, meaning that once the fund structure is in place, operations can commence immediately. This swift setup process is a major benefit for fund managers who need to capitalize on market opportunities without unnecessary delays.
Gibraltar also offers significant flexibility. There are no diversification requirements or restrictions on borrowing or leverage, giving fund managers complete freedom in how they structure their investments. Moreover, there are no limits on the types of assets that can be included in a fund, making Gibraltar an ideal jurisdiction for those dealing with emerging asset classes, such as cryptocurrencies and digital assets.
Following Brexit, Gibraltar gained even more appeal as it no longer falls under the EU’s Alternative Investment Fund Managers Directive (AIFMD). This change allows fund managers to operate outside the constraints of the €100 million and €500 million thresholds imposed by the AIFMD, offering greater freedom and less regulatory burden compared to EU jurisdictions.
Taxation is always a concern for fund managers, and Gibraltar addresses this head-on by offering a tax-neutral environment. Funds can be set up without incurring capital gains tax, value-added tax (VAT), or withholding tax on distributions, making it an attractive jurisdiction for those looking to maximize returns for their investors. This tax neutrality is a key differentiator that makes Gibraltar highly competitive on the global stage.
In terms of structuring options, Gibraltar provides a variety of vehicles, including private limited companies, protected cell companies, limited partnerships, and protected cell limited partnerships. This range of choices ensures that fund managers can select the structure that best fits their specific investment strategies and operational needs.
Cost is another significant factor where Gibraltar stands out. With competitive setup fees and ongoing operational costs, the jurisdiction offers an affordable yet sophisticated environment for fund managers. For those looking to balance regulatory oversight with cost efficiency, Gibraltar provides an optimal solution.
A major player in Gibraltar’s rise as a fund jurisdiction is Hassans, the leading law firm in the region. With a dedicated Funds team, Hassans provides end-to-end project management, guiding fund managers through the entire setup process from inception to launch. Their expertise ensures that the often complex and nuanced world of fund structuring is handled seamlessly and efficiently.
Gibraltar’s track record speaks for itself. The jurisdiction’s EIF legislation has been in place since 2005, providing a strong regulatory foundation for fund managers. The Gibraltar Financial Services Commission (GFSC) oversees the sector, ensuring that all funds meet the highest standards of compliance and governance. Moreover, Gibraltar has developed a mature ecosystem, supported by the Gibraltar Funds & Investments Association (GFIA), which plays a pivotal role in maintaining the jurisdiction’s competitive edge.
In addition to these advantages, Gibraltar’s time zone (Central European Time) aligns perfectly with the working hours of many European investors. This makes the jurisdiction particularly convenient for fund managers looking to engage with European clients, and its proximity ensures quick and easy travel between Gibraltar and major financial centers across Europe.
In conclusion, Gibraltar combines the best of both worlds: regulatory flexibility and efficiency with a competitive cost structure and favourable tax regime. Whether you’re managing traditional investments or breaking into the crypto market, Gibraltar’s unique blend of benefits makes it an ideal location for structuring your fund. As the world of finance evolves, Gibraltar stands ready to support fund managers in achieving their goals.
Author:
Aaron Payas