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Gibraltar joining Schengen makes it the Ultimate Residence

Isaac Levy
Team Leader (Development Finance), Partner
Selwyn Figueras
Partner

On 31st December 2020, the Chief Minister of Gibraltar, Fabian Picardo, announced that a Framework Agreement had been reached between the United Kingdom and Spain in respect of Gibraltar which will ultimately be formalised as an agreement between the European Union and the United Kingdom.

In what represents both a reprieve and an opportunity for the jurisdiction, the framework provides principally for Gibraltar’s inclusion in the Schengen Acquis.

The key benefit stemming from the agreement is anticipated to be the preservation of, and potential improvement in border fluidity, the key area of concern for Gibraltar following its departure from the EU and the conclusion of the implementation period at the end of last year.

Gibraltar has, since the referendum on the United Kingdom’s membership of the EU held in June 2016, faced an uncertain future.  Voting overwhelmingly to remain in the EU, largely in acknowledgement of the symbiotic nature of its relationship with Europe, Gibraltar has consistently worked to mitigate the potentially most damaging effects of Brexit.

In October 2016, then Trade Secretary Liam Fox MP announced that the U.K. Government had agreed to preserve direct market access to the U.K. for Gibraltar-based business post Brexit.

In addition to this early ‘win’, Gibraltar also entered into further various agreements, working with the U.K. Government to negotiate and conclude further agreements,:

  • In 2018 United Kingdom signed four Memoranda of Understanding with Spain to allow for enhanced cooperation between Gibraltar and Spain in many key areas.
  • In 2019 the United Kingdom signed a Tax Treaty relating to Gibraltar’s relationship with Spain. An effect of this treaty is that Gibraltar will be removed from the Spanish Black list of non-cooperative jurisdictions.
  • In 2019 Gibraltar agreed a modern fully fledged Double Tax Treaty with the United Kingdom.
  • In 2020 the United Kingdom legislated to provide Gibraltar’s regulated financial firms with continued market access to the United Kingdom – a privilege unique to Gibraltar.
  • At the end of 2020 the United Kingdom signed a Free Trade Agreement with the European Union and whilst the treaty does not apply to Gibraltar but it will benefit all British Nationals.

The latest agreement provides a framework for Gibraltar to be included as part of the ‘Schengen Acquis’ area of free movement of persons.  Negotiations are now underway and expected to conclude within six months on the practical application of the agreement.  It is anticipated that arrivals to Gibraltar’s port and airport will be subject to Schengen checks and that passport control at the current land border will cease to operate.  Other security controls will likely remain, as is the case elsewhere in within Schengen.

The movement of goods will be the subject of further talks to agree, as the Chief Minister described last week, whether Gibraltar should seek to join ‘the Customs Union’ or a customs union arrangement with the EU.  We expect development in this context to progress at pace.

Gibraltar as the European High Net Worth Destination of Choice

Gibraltar’s position as a favourable residence for High Net Worth Individuals has only been enhanced by this process.

Key Gibraltar benefits are:

  • Low Personal tax system including tax systems targeted at High Net Worth Individuals and High level Executives
  • Low Corporate tax
  • No wealth tax
  • No capital gains or inheritance tax
  • No tax on investment income
  • Strong Common Law legal system with a well-equipped judiciary.
  • Business friendly jurisdiction with quick access to key decision makers
  • Mediterranean sunny weather
  • Schengen access to Spain including the nearby Costa Del Sol
  • Low crime
  • Children and family friendly
  • English education system with both an excellent state and private provision
  • Local airport in Gibraltar and 1 hour drive away from Malaga Airport the fourth busiest airport in Spain.

All these key benefits make Gibraltar a uniquely favourable jurisdiction to establish your residence.

For more information, please contact Isaac Levy on isaac.levy@hassans.gi.

 

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