Gibraltar is a dependent territory, yet it is also an offshore one. Like the Cayman Islands or the British Virgin Islands, it is a common law jurisdiction that has an attractive tax regime for certain categories of companies and individuals. It has its own constitution and the House of Assembly makes its own laws on domestic issues (external affairs, such as foreign policy and defence, are the domain of the UK).
But Gibraltar is not a “no-tax” jurisdiction. What distinguishes it the most from other UK offshore territories is that it is a member of the European Union (EU). At the time of the UK's accession, Gibraltar felt that its purposes would be best served by coming into the EU under the skirt of the UK. Given the size and limited scope of Gibraltar, provision was made that VAT does not apply, it is not within the common customs area, and, unsurprisingly for somewhere that is essentially rock, it is not within the common agriculture policy. These three distinctions give it a unique status within the EU.
But all EU laws still apply in Gibraltar, including EU directives, which are brought into local law. In some ways, this is not entirely practical. Gibraltar has the same legislative burden as full member states and yet has a population of only 30,000.
A large number of the big-name banks maintain a presence in Gibraltar, which was the first of this type of jurisdiction to introduce financial services regulation, which it did in 1989. The regulator (the Financial Services Commission) is charged with not only licensing and regulating financial services, but also overseeing the business of professional trustees and of company management. Only now are the Channel Islands and the Isle of Man introducing this sort of regulation.
Most law firms on the Rock have in-house trust companies and company management arms. These primarily offshore services are received for overseas clients – there is currently no possibility of ordinary residents of Gibraltar benefiting from the special tax regimes because there is, of course, domestic tax.
Nearly all firms provide company formation and trustee services. Denton Wilde Sapte, however, is the only international firm in Gibraltar – all the rest are local. There are four main domestic firms – Hassans, Triay & Triay, Isola & Isola and Marrache & Co – but all bar one, Marrache, have not spread themselves outside Gibraltar. They take the understandable attitude that they are better off keeping relationships going and relying on referrals.
To practise in Gibraltar, all lawyers must have qualified in England, Scotland or Ireland. They can then be admitted in Gibraltar (a formal process). The jurisdiction has a fused profession made up almost entirely of barristers – there are very few solicitors. This may primarily be because the route to qualification as a barrister has, historically at least, been perceived as more straightforward for those intending to establish or join a legal practice in Gibraltar.
Gibralter law firms are occupied by a variety of general commercial and company work. Banking work is also a big money-spinner, although it is mainly through private banking rather than retail banking. This in turn means that nearly all firms have private client practices and act for a number of high-net-worth individuals. Barclays, the Royal Bank of Scotland and NatWest are the only banks providing retail services. The others – Lloyds TSB, SG Hambros, Crédit Agricole, Credit Suisse and ABN Amro, for example – concentrate on private banking. Corporate work, however, does exist – there are more than 70,000 registered companies in Gibraltar, of which probably around 40,000 are active, so most corporate work emanates from them. Other areas of activity for lawyers include shipping, trust work and, increasingly, e-commerce-related advice and services.
Nicholas Keeling is managing partner of Denton Wilde Sapte's Gibraltar office