Trusts may be created in Gibraltar under the Trustees Act which is based on the English Trustee Act of 1893. There is no legal requirement to register Trusts in Gibraltar although voluntary registration is possible.

A trust is considered resident in Gibraltar where it has one or more beneficiaries who are ordinarily resident for tax purposes in Gibraltar.  A Gibraltar resident trust is subject to taxation in Gibraltar at the rate of 12.5%.

A Gibraltar trust which has non-resident beneficiaries is not subject to taxation in Gibraltar and all of its income (with the exception of Gibraltar rental income, income from a trade, business, profession or vocation which has accrued in and derived from Gibraltar) may be accumulated free of tax in Gibraltar.

A trust (a “Trust”) is a legal arrangement whereby certain assets are placed under the control of trustees (“Trustees”)for the benefit of certain persons (“Beneficiaries”).  This arrangement is established by means of a trust deed (“Trust Deed”).

Although completely different legal structures, the comparable terms in a company would be as follows:

• Trust – Company
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• Trustees – Directors
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• Beneficiaries – Shareholders
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• Trust Deed – Constitutional documents of a company

A Trust is, of course, different and the above comparison is made for illustrative purposes only to give persons unfamiliar with Trusts a starting point to be able to understand them.

A Trust will usually also have a settlor (“Settlor”)which is the person (or persons) who donate assets (“Assets”) to a Trust. Such donation is called a settlement and can consist of, most commonly, money, real property, shares or any other assets of whatsoever nature.

The Settlor can settle Assets at the beginning when the Trust is established and also at any other time during the life of theTrust.   

The Assets are then administered by the appointed Trustees for the benefit of Beneficiaries named in the Trust Deed. Sometimes a Trust is discretionary in its nature in that theTrustees have the power to appoint and remove Beneficiaries. The Trustees will be guided by the wishes of the Settlor in this regard when the Trust is initially set up.

In some ways, a Trust can be seen as a “living will”. In life, a Settlor can transfer Assets under the control of the Trustees and set out terms in the Trust Deed as to how these should be dealt with.

The result of settling Assets on the Trust is that legal ownership passes from the Settlor to the Trustees who will then manage these in accordance with the terms of the Trust Deed.

Upon the occurrence of a pre-determined event, such as the Beneficiaries attaining a certain age, or the Settlor passing away, the Trustees will transfer the Assets to the Beneficiaries plus any income earned from their investment. Until such time, it is possible for the Settlor to receive, for example, the income generated from monetary investments. They would normally not, however, be able to have access to the capital. 

Pending the occurrence of such event, the Trustees are under a strict duty to administer the Trust Assets in accordance with the terms set out in the Trust Deed and to exercise a high degree of prudence and caution.

The Settlor may wish to appoint a Protector of the Trust. They would normally be a person who enjoys the confidence of the Settlor and will control and supervise the exercise of the powers of the Trustees.

On important matters, such as the addition or removal of Beneficiaries or the payment of a distribution, such powers cannot be exercised by the Trustees without the explicit consent of the Protector. 

The Protector will frequently also have the power to remove and appoint Trustees.

We are regulated to provide professional trustees via our associated regulated trust and corporate service providers: Ellul & Co. Corporate Services and Acquarius.