There is no doubt that any future relationship between the United Kingdom (and Gibraltar) and the European Union after the United Kingdom leaves the bloc, is uncertain. Despite this, Gibraltar is considering its exit from the European Union as an opportunity and not a threat – and Gibraltar has every reason to feel bullish about life outside of the bloc. The Gibraltar Financial Services Commission has issued 21 licences since the referendum vote and has another 22 in the pipeline. Gibraltar has also issued two new gaming licences in that time and has another three pending. This was confirmed by Chief Minister Fabian Picardo, addressing business leaders at a dinner organised by the Gibraltar Chamber of Commerce which took place on 26 April 2017, who described this as “a truly remarkable vote of confidence in Gibraltar.” This message was underscored on the same day when Gibraltar-based gaming company BetVictor made a ‘huge’ statement of intent declaring “we are here, we are not going anywhere”, as it inaugurated its new offices at Gibraltar’s World Trade Centre.
The economic model of the Gibraltar we know today, has not been without its challenges. However, it has always found ways of overcoming these and growing and diversifying despite these. Entrepreneurship has always been at the heart of the territory and this is a Gibraltarian mindset with old roots. It is the inherent entrepreneurial spirit which flags post-Brexit opportunities for Gibraltar. This was marked by the local launch of StartupGrind, an entrepreneurial community backed by Google, aiming to nurture start-ups in 85 countries. It presents a good opportunity for Gibraltar to be on the global map once again and the importance of having been selected by StartupGrind as the next city chapter cannot be understated. At its inaugural event, Mike Balfour, the founder of the world’s largest chain of health clubs, ‘Fitness First’ said he, considered Brexit an opportunity for Gibraltar to really tear up the rulebook and make Gibraltar a really entrepreneurial society. He also said that “we [Gibraltar] could be the Singapore of Europe”.
Taking the first step to making this a reality, in what is posed to be the most significant development for Gibraltar as a jurisdiction for doing Fintech business, the Government has very recently issued a press release advising of the imminent publication of a consultation by the Gibraltar Financial Services Commission on proposals for Distributed Ledger Technology Framework. ISOLAS and it’s Fintech think tank, ThinkFintech.gi, have been busy working with Government as part of the working group that has helped shape the discussion on these potentially significant opportunities for the development of Gibraltar as a centre of excellence and innovation in financial services. Joey Garcia, Partner at ISOLAS commented that “the fact that much of this kind of business is Brexit insensitive augurs well for both the traction the industry is gaining in Gibraltar and for the Government’s determination to make Gibraltar a home for this very exciting area of financial services”. Gibraltar will also be hosting a Digital Currency Summit on 9th May 2017 which ISOLAS are proudly sponsoring as leaders in the Fintech space in Gibraltar.
Below are some reasons why Gibraltar should be considered a start-up hotspot in Europe:
- New business start-ups in Gibraltar can apply to the Gibraltar Business Nurturing Scheme for a maximum of £25,000 in the form of a loan, for the commencement of a new business or the expansion of an existing one. Whilst this initiative hardly stands out in the company of the panoply of start-up incentives provided to entrepreneurs in other top start-up ecosystems, the Gibraltar Government has been putting a lot of effort into attracting start-ups to the Rock.
- The Office of Fair Trading (OFT), established by the Gibraltar Government, houses a ‘Single Point of Contact’. This office is a convenient “one-stop-shop” that provides for the various licensing and registration requirements that were previously handled by different Government departments. At the OFT offices, such processes are addressed under one roof, where businesses and individuals will also be offered the provision of guidance and support. The OFT also assists applicants by liaising with Government departments and by providing all the necessary forms in relation to, for example, employment registration, registration for business licensing and registration for tax and social insurance.
- In the Budget measures announced for 2016, the Gibraltar Government created a scheme providing tax credit to start-ups. Over the first three financial years of trading of the start-up business, a company or limited partnership is eligible for a tax credit equal to the tax due, subject to a maximum of £50,000 over each of the first three years. There are a number of conditions that need to be met in order to qualify for this tax credit, such as employing at least five employees in the first year, as well as anti-avoidance measures to ensure it only applies to genuinely new businesses in Gibraltar.
- Gibraltar can provide a good testing ground to prove a start-up model due to it being a captive market of approximately 30,000 inhabitants conveniently packed into an area of approximately 6.5 km2 which means a good cross-section of the wider global market can be targeted before going global.
- As part of the Gibraltar Financial Services Commission’s commitment to supporting both existing licensees and those looking to take their first steps into the financial services sector – either as a financial services firm or offering support to financial services firms – it has established the Innovate and Create Team. The Innovate and Create Team is made up of a number of individuals from across the organisation and it has been set up to help encourage innovation by supporting those businesses looking to develop and introduce innovative ideas for financial products or services into the market.
- New and existing businesses in Gibraltar enjoy easy access to telecommunications, modern office space and other key infrastructure as well as markets which can be reached via land, air and sea. Current destinations from Gibraltar’s airport include daily departures to the United Kingdom (various routes) and weekly departures to Morocco. Historically, highly-priced office space with three-or five-year leases could be considered a show-stopper for any start-up. Companies such as Regus in Gibraltar’s World Trade Centre allow any start-up to have access to serviced office spaces, virtual offices, co-working spaces and meeting rooms without needing to commit to long-term office space costs during the most critical time for a start-up; its incubation period.
- Favourable tax packages for High Net Worth Individuals and High Executives Possessing Specialist Skills who want to establish residence in Gibraltar and can benefit from tax payable on income being restricted to a capped amount, which not only encourages talent to the Rock but also incentivises investment in start-ups.
- Gibraltar has an excellent talent pool consisting of a highly qualified workforce. High relocation rates mean there is a diversity of ideas, experience and creativity. Alongside to the existing talent pools, Gibraltar has had a steady inflow of new talent particularly in fin-tech related fields.
- The rate of corporation tax is 10%. No death duties, capital gains tax, gift, value added tax (VAT), inheritance, wealth or capital transfer taxes are presently levied in Gibraltar.
- Gibraltar companies are seamless to incorporate and the process is free of bureaucratic delays. There are no specific restrictions governing directors and shareholders. Gibraltar companies are not subject to minimum capital requirements and have low maintenance costs and streamlined filing requirements for micro-entities and small companies that start-ups would frequently categorise into by default.
To conclude, Gibraltar’s success as a start-up destination will not be accidental. Its supportive and innovative stakeholders who see the big picture and maintain a ‘can do’ mentality, coupled with its flexible working spaces and affordability all add up and it is evident that Gibraltar is well on its way. Gibraltar’s economy has often been described as one that is ‘running on all cylinders’ and Gibraltar is confident that this is a growing trend that will make Gibraltar an exciting destination to be in business in. Whatever the reason for establishing a business activity in Gibraltar, the Rock has something for everyone.
Jonathan Garcia, Partner, ISOLAS
