Gibraltar trust law, which is based on Anglo-Saxon legal concepts, recognises and gives full legal effect to the concept of a trust. The Trustee Act, the main legislation governing trusts in Gibraltar, is based on the English legislation incorporated in the Trustee Act 1893.
There have been certain amendments to the legislation, and the Variation of Trusts Act 1958 has been introduced in Gibraltar under the English Law (Application) Act.
The concept of a discretionary trust is known and widely applied in Gibraltar and the provisions of the Perpetuities and Accumulations Act 1964 in England apply with some amendments. The perpetuity period and the accumulation period now stand at 100 years.
The Registered Trust Act 1999 provides a facility for the registration of a trust deed (where registration is required by the trust deed) and for the keeping of an index of the names of such trusts. A registration fee is payable (£100) together with the submission of a form of Short Particulars and the Deed of Trust. The latter is simply endorsed with the date of registration and returned; no copy is retained. The register will thereafter contain only the following details for public inspection: the name and date of creation of the trust, the amount of the initial settlement, the name of the trustee(s), a Gibraltar address for service and the date on which registration was made.
Until 31 December 2010, the income received by any trust or beneficiary under a trust was exempt from taxation provided the following conditions were met:
The capital of a trust is also not liable to tax in Gibraltar.
This type of trust seeks to protect the assets of a settlor from such situations as political strife, forced repatriation, confiscatory taxes, exchange controls and, most recently, risks associated with litigation arising from malpractice or negligence suits or from vexatious litigants.
Such a trust may be invaded by a creditor of the settlor, should it be shown that transfers into the trust lacked legal propriety. Gibraltar has sought to reduce the uncertainties that can arise when determining propriety by shifting the focus to the objective test of solvency contained in the Insolvency Act 2011, Section 419A.
Under the provisions contained in the Bankruptcy (Register of Dispositions) Regulations 1990, an application may be made to register the trust by an approved trustee who has demonstrated adequate financial and administrative resources and professional indemnity insurance. Thereafter, the trustee must be able to show that due and sufficient enquiry was made to establish the propriety of the disposition and the solvency of the settlor at the time it was made. The registration of the disposition is renewable annually on payment of an annual fee (currently £100).
This higher degree of certainty makes Gibraltar a favourable location for setting up asset protection trusts.