Ian Le Breton © 2019-2020 Legal stuff

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THE NEW YEAR: MORE CHALLENGING THAN THE LAST?


Another New Year is upon us.


Christmas? Check.

UK General election? Check.

Brexit? Check (well almost).

Etc.


And so we start the new decade:  forget the oft repeated falsehood that we started counting at Year 0 and let’s move on.  It is goodbye and probably good riddance to the century’s troubled teens, and welcome to the ‘twenties.…


The UK election resulted in a more than comfortable majority for the Tories leading to, it is safe to assume, the UK finally exiting the EU at the end of this month. Leave aside “remain” and “leave” from now on. The people have spoken and off we go. I doubt that the required trade deal will be as easy as A-B-C. True the stable government now in place promises much more clarity – but the negotiations need to be completed at the same time as the rest of the promised domestic legislative programme is rolled out. I will be watching with interest.


I confess to having been somewhat distracted this past autumn in the run up to the festive season. The elections here at home, in Spain and Gibraltar have coincided with relocating from central London to a picturesque village in South Somerset. The main street dates back several centuries and comes complete with cottages, thatched roofs, and a lifestyle that seems decades away from the 21st century. Do not be deceived – fibre broadband means we are far more connected than when we called Pimlico in London home.


I am wary of falling into the “what will 2020 bring?” trap for one cannot foresee events. Even as the strains of Auld Lang Syne hang in the air, tension is building in the Middle East as we enter a new uncertain phase in global geopolitik.  


As an independent consultant, I spend my time informing corporate and private clients on a wide range of areas. My focus continues to be trusts, international companies and pensions – generally avoiding the word “offshore” for fear it may be misunderstood. In these areas, I see trends continuing in 2020 much as before with further emphasis on the necessity for independent advice every time and tax, banking and compliance requirements becoming ever more central to the decision making process. There are still important benefits to be derived from international structuring but it must be done in a fully compliant, and where required, reportable manner.


There are those (but note, I am not one of them) who would have you believe that the use of international trusts and companies whether for private individuals or corporate entities is dead, or at least on life support. In my opinion, nothing could be further from the truth – despite appearances.


In recent years, the industry has had to implement the OECD’s Common Reporting Standard and other initiatives such as FATCA in the US. Among other changes to be considered are the new rules concerning reporting the ultimate beneficial ownership of such structures, a lot of which is on-going even now.


The cost of providing such structures so that they remain fully compliant continues to increase. It is hardly surprising then that many smaller firms involved in the trustee and corporate services business are contemplating their future. In recent years, across many jurisdictions, we have seen mergers, winding ups or straightforward refusal to take on certain kinds of work by a number of these firms. I am busier than ever ensuring that suitable introductions are made to the right people at the most appropriate firms for a client be they private or corporate and depending on their particular needs, choice of jurisdiction, attitude to cost etc. Gone are the days when a BVI offshore company could be had for a few hundred dollars all in. And not before time in my view.


I hope that 2020 will be peaceful, prosperous and when it comes to trusts, international companies or pensions – however combined – well structured. Throughout the year I will be posting articles on diverse topics in this field.  Please sign up in order to receive them as they are released and indeed let me know if you’d like something special covered or researched.  If I can assist you or your clients, feel free to get in touch at any time for a no obligation chat.

I wish you a healthy, prosperous – and compliant – New Year 2020


6 January 2020


GIBRALTAR CONTINUES TO PUNCH ABOVE ITS WEIGHT.....


The first week of November 2019 was a busy one for Gibraltar here in the UK. As part of the now much expanded “Gibraltar Day in London”, no less than five financial services events were hosted by HM Government of Gibraltar over the course of the week across the capital.


These were put on as part of the government’s Think Business #ThinkGibraltar campaign that has also seen extensive and attractive advertising involving no less than 100 London buses, 300 black cabs and 40 key commuter stations all over the city. A number of other “fringe” events were held during the week by different firms within the private sector.


The Gibraltar Day in London events have been held for almost twenty years; I have been privileged enough to attend at least one event most years since 2000. The Financial Services lunch has always been a key feature but over the years, the scope has grown so that in 2019 separate events were held apart from the lunch to include funds and asset managers, private clients and family offices, insurance and distributed ledger technology (or DLT for short).


The DLT event was of particular interest to me. It took the form of a seminar and networking reception in the stunning surroundings of Level39 which is the world’s most connected tech community, located at Canary Wharf. In just six years, Level39 has grown into an 80,000 sq ft accelerator space occupying three floors of the iconic One Canada Square building including (naturally enough) the 39th floor from where stunning views across London may also be enjoyed.


Gibraltar was the first jurisdiction to regulate DLT. Since the legislation came into force in January 2018, a growing number of firms have submitted themselves to the rigorous process leading to the issuing of a coveted DLT licence. Several were announced in the weeks running up to Gibraltar Day in London and the seminar included an impressive panel discussion where several of the recently regulated firms were represented. The most exciting take away for me was that several of the principals on the stage were from all over the world, demonstrating the truly global appeal of Gibraltar’s innovative principles-based approach. It was good to see the event attended by a full house of some 150 industry professionals.


Running the seminar was Gibraltar Finance’s Senior Executive, Paul Astengo who introduced the recently re-elected Hon Albert Isola MP who is the aptly named Minister for Digital and Financial Services (note how Digital comes first!). He was followed by seasoned industry professional Kerry Blight who took up his new role as CEO of the Financial Services Commission (the regulator) in October.


The event was all very positive and comes at a pivotal moment for Gibraltar. As Britain faces a General Election designed to break the logjam of Brexit, the jurisdiction’s relationship with the UK is now more important than ever.


And there is plenty of news to report.

The long awaited Gibraltar-UK Double Taxation Agreement (“DTA”) was signed in mid-October and announced on the 21st in good time for the London events a fortnight later. Amongst other positive comments at the time, the UK Exchequer Secretary stated that Gibraltar is an important part of the UK family and that the proposed DTA provides an opportunity to strengthen yet further the relationship as Britain makes plans ahead of leaving the EU.


It is also more than helpful to Gibraltar that the newly elected Speaker in the House of Commons, The Rt Hon Sir Lindsay Hoyle MP, has been a true friend and regular visitor to the Rock for a number of years.


In a further diplomatic move, Dominique Searle MBE, Gibraltar’s Representative to the UK, laid a wreath as the Chief Minister’s Special Representative during the Remembrance Day ceremony at London’s Cenotaph along with others from Britain’s Overseas Territories and Crown dependencies.


It might be an overused expression to say that Gibraltar punches well above its weight but in the area of financial services and especially in the innovative brave new world that is distributed ledger technology and blockchain, it really is true. I am delighted to be involved from my UK base and I look forward to the Rock’s continued successful development and growing prosperity in this area.


11 November 2019


SETTING UP A COMPANY IN THE EU IN A POST-BREXIT WORLD


Haven’t we heard enough about Britain leaving the EU? There is clearly a huge amount of “Brexit fatigue” gripping the country – even if new UK Prime Minister Boris Johnson has pledged to get it done by the end of October “do or die”. It remains to be seen if the proroguing of parliament helps or hinders his achieving his objective.


The point of course is that after three years since the “in-out” referendum, we are only approaching the end of the beginning. All the talk so far has been about getting us to a point where we can then start negotiating future terms with our European friends. Or “rump EU27” as the British press unkindly refers to the remaining 450 million population bloc.


For British businesses with European aspirations it will not be enough to ignore the new reality. For many, the opportunities afforded by setting up a subsidiary – or in extreme cases relocating altogether – to an alternative EU member state may be worth considering. But where to go?


I have been assisting clients in this area for the last fifteen years. Previously a senior director at one of the world’s largest independent trust and corporate service providers, nowadays I act as an independent consultant. It is my job to inform and guide individuals and corporates through these very questions. I have noted several themes as the pro- or anti- EU propaganda machines continue to spurt out their opinions – often completely at odds with each other.


Naturally most EU countries are attracted to the potential new business that might emanate from a dynamic UK soon to be frozen out of EU protocols and membership advantages. Indeed the Dutch government, to mention just one example, are very proactive in trying to secure their share of the cake. Other states are equally proactive.


There are distinct advantages to be had by setting up in the Netherlands – and the same could be said for almost any one of the EU27. So where am I seeing most demand presently? For the purposes of this ianlebreton.comment I am restricting my scope to purely “onshore” solutions by which I mean a properly constructed corporate vehicle in an EU member state. This will be subject of course to the respective rules, regulations, tax implications and so on. Let’s leave the international centres (those we used to call “offshore” before the term became toxic) for another day.  


There are two fairly obvious destinations for UK business owners given their previous British links, membership of the Commonwealth, English language and so on: Malta and Cyprus. Both have well developed infrastructure and an impressive range of company law (much of it based on its English forebear) and finance centres where advice may be readily found. Both have enacted favourable corporate taxation regimes and beneficial residency rules for those business owners seeking to create real substance (an ever increasing requirement these days).   


Ireland is also one of my favourites. The closest jurisdiction to the UK in many ways - geographically, historically and with a company registration system very similar to that found in the UK. During all the talk about Brexit, one aspect seldom commented upon is the Common Travel Area or CTA that dates back almost a century predating the EU by 50 years. Current plans are that benefits afforded by the CTA to citizens of both the UK and Ireland will continue to apply after 31 October.


Of course a case could be made for establishing a subsidiary (or full relocation) in any one of the EU countries and in my time I have assisted and made introductions to professional associates in almost all of them. Some are most definitely easier than others. Whilst the member states mentioned so far are obvious choices, maybe it is worth considering somewhere slightly further afield.


My personal favourite is Lithuania. I am a regular visitor and can attest to the general “can do” attitude of its government, professional sector and indeed the most welcoming people. All the professionals worth dealing with are totally fluent in English and government backed initiatives such as Invest Lithuania can help. When strolling through the historic centres of its capital Vilnius or second city Kaunas, it is sometimes difficult to believe that the country broke free from the Soviet yoke just thirty years ago. The country has become independent, joined the EU and NATO and adopted the euro. A well educated workforce and lower costs of doing business than one might expect has developed Lithuania into an enviable “go to” location in recent years. The country has accelerated its innovation in new areas such as blockchain and I can attest personally to its real commitment to that exciting new sector.  There are excellent reasons to consider this jurisdiction, and I’d be delighted to assist.


We are living in interesting and fast-moving times, to be sure. It is tempting to do nothing in the meantime and simply watch developments from the stands. But as my inbox demonstrates on a daily basis, this is not the approach favoured by all. Contact me at any time to initiate a discussion on incorporation in the EU in a post-Brexit world. You may be in for a pleasant surprise.


29 August 2019


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