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Tuesday, September 9, 2014, 16:25

Gibraltar: Potential gateway to European finance markets

By Agnes Lu in Hong Kong
Gibraltar: Potential gateway to European finance markets

Phillip Canessa, senior executive with Gibraltar Finance

While many Hong Kong investors have been scheduling investment plans in European financial markets, geographical remoteness is of prime concern.

But now, Gibraltar — a self-governing and self-financing jurisdiction in the European Union at the entrance to the Mediterranean — might be a potential gateway to conduct “pass porting and marketing your services to the rest of the European Union (EU) purely through a process notification”, says Phillip Canessa, senior executive with Gibraltar Finance — the financial services arm of the government of Gibraltar.  

“We have three main things, one of which is regulation. We regulate our procedures and rules according to EU standards like other jurisdictions. Because we’re a small place, we have the advantage, from time to time, of marketing for a firm using the regulator that is sensible and approachable,” Canessa told China Daily.

“Also, because we’re so small, we have to ensure that our reputation is always sound. It’s a comfort for anyone who wants to come to Gibraltar. Apart from that, we have what we call Experienced Investor Funds (EIF). We’ve got a system where you can launch the fund and then notify the regulator that you’re doing it. So, the fund doesn’t need to be authorized by the regulator,” he added.

The EIF regime was introduced in 2005 to allow experienced or high net worth investors to set up funds quickly with minimum regulatory intervention. As no previous authorization will be imposed, the time needed to launch the funds and react to market changes will be reduced significantly. The Alternative Investment Fund Managers Directive (AIFMD) has been in practice since July.

Canessa said the peninsular has many similarities with Hong Kong. “There’s only one official language, which is English. Our laws are based on English common law, the same as Hong Kong, which is very familiar to all professional people working in Hong Kong. Our lawyers and accountants are all trained in the UK, and our education system is identical to the UK’s as well.”

While Gibraltar was called a “tax haven” years ago, the peninsular now charges a corporate tax rate of 10 percent and a personal tax rate of no more than 25 percent. Gibraltar is also not subject to the VAT regime, and financial services account for about 20 percent of GDP of the British Overseas Territory.

Canessa also said Gibraltar International Bank will be in operation in the next few months to provide depository services to alternative fund investors.

“We also hope to set up a Gibraltar stock exchange which, initially, would be for listing funds for investors who want that extra comfort of transparency, who want to have a fund listed in the European stock exchange, as Gibraltar is part of it. Potential investors can look for the funds listed there and do their own research and investment,” he advised.

Kevin Yip, chief operating officer of iFast Financial (HK) Ltd, said offshore jurisdictions like Gibraltar have shifted from attracting mainly insurance and trust investment to developing multiple investment platforms in recent years. Some of them have the same legal system as Britain’s, and this is beneficial to Hong Kong-based investors.

“Compared with other jurisdictions, Gibraltar has a favorable tax rate system that might eliminate many problems caused by double tax treaties. However, its geographical remoteness, different time zone and confidentiality, compared to other jurisdictions like Ireland and Luxemburg, are still something investors should pay attention to,” Yip said.


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