Monday, 24 October 2016
Last updated 1 hour ago
Jun 3 2013 | 10:58am ET
When British Prime Minister David Cameron asked the U.K.'s overseas territories to "get our own houses in order" on tax avoidance, this was likely not what he had hoped for: a push from Gibraltar to lure London's hedge funds to its low-tax shores.
Gibraltar, the tiny British Overseas Territory on Spain's south coast, has asked Britain's hedge fund managers to consider moving to "the Rock," inviting them to take a look at the place, The Guardian reports. Chief Minister Fabian Picardo said that life in Gibraltar would be "much cheaper," noting that even the highest-earning managers could pay as little as £30,000 per year, and just £120 per family per month in social security payments. Gibraltar also has not value-added sales tax.
Promotional materials also trumpet the fact that hedge funds are "unlikely to be liable for corporation tax" in Gibraltar.
"The profits of any branch or permanent establishment of the investment manager are not subject to tax in Gibraltar, to the extent that those activities are undertaken outside Gibraltar," the materials said. In addition, the territory, which is self-governing and which has the same status as the British Virgin Islands and Cayman Islands in the Caribbean, as well as Bermuda, notes that "high executives possessing special skills" could receive "special tax status," further lowering their income tax.
And, of course, there are the "300 days a year of constant sunshine," Picardo told the Guardian.
Unlike Britain's other overseas territories—and the Channel Islands, which are Crown Dependencies—Gibraltar is part of the European Union. And Picardo denied allegations—notably from Spain, which claims it as its own—that Gibraltar is a tax haven, saying it already has "the toughest regulation."
Gibraltar "does not want to be associated with money that stems from tax evasion, fraud, money laundering or from any other source that is not absolutely acceptable," Picardo said.