GIBRALTAR Law and Practice Contributed by: Stuart Dalmedo, Adrian Pilcher and Louise Anne Turnock, ISOLAS LLP
1.2 Use and Taxation of Transparent Business Structures Gibraltar recognises a range of transparent entities, primarily used for tax efficiency, flexibility in manage - ment, and suitability for investment and fund struc - tures. General Partnerships General partnerships are established under the Part - nership Act 1895 and operate as “traditional” partner - ships. They do not have separate legal personality, and each partner may bind the partnership in the ordi - nary course of business. All partners have unlimited liability for partnership debts. General partnerships are commonly used for small, closely held businesses where partners wish to maintain flexibility and minimal administrative burden. Limited Partnerships (LPs) Limited partnerships were modernised under the Lim - ited Partnerships Act 2021, replacing the 1927 legisla - tion and significantly enhancing the regime. Gibraltar LPs allow: • partnership interests to be represented by shares, bonds, notes or other securities; • limited partners to take a more active role without losing limited liability; • the general partner to elect whether the LP has or does not have separate legal personality; and • voting rights to be aligned with partnership inter - ests unless varied. LPs are tax transparent. Each partner (corporate or individual) is taxed on its share of the partnership’s income. LPs are frequently used in: • investment structures; • private equity arrangements; • funds and asset-holding vehicles; and • cross-border family wealth structures. Protected Cell Limited Partnerships (PCLPs) Under the Protected Cell Limited Partnerships Act 2021, an LP used as a fund vehicle may create mul -
tiple segregated cells, ring-fencing each cell’s assets and liabilities from the others. PCLPs are particularly attractive for: • multi-strategy funds; • umbrella fund structures; and • investment managers seeking asset segregation LLPs are established under the Limited Liability Part- nerships Act 2009. An LLP is a body corporate with separate legal personality, while members have liabil - ity limited to the amount agreed between them (typi - cally their capital contribution). LLPs combine: • corporate style limited liability; and • partnership style flexibility and transparency. They are commonly adopted for: • professional services firms; • joint ventures; and • international investment groups seeking tax trans - parency combined with limited liability. 1.3 Tests for Determining Tax Residence Companies Under Section 74 of the Income Tax Act 2010, a com - pany is considered “ordinarily resident” in Gibraltar if: • its management and control is exercised in Gibral - tar; or without incorporating multiple entities. Limited Liability Partnerships (LLPs) • its management and control is exercised outside Gibraltar by persons who are themselves ordinarily resident in Gibraltar. There is no statutory definition of “management and control” in Gibraltar. Instead, the concept is deter - mined by English common law, incorporated into Gibraltar law by the English Law (Application) Act. Authorities such as De Beers v Howe and Bullock v Unit Construction confirm that residence is deter - mined by where the highest level of strategic deci -
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