Notes from Madrid: cross-border lives and businesses need joined-up advice

A big part of my role as a business developer is listening – to clients, to the advisers that we work with, as well as to what the market is telling us. During a recent trip to Madrid, where I spent time with the legal and tax community, a few clear trends emerged. Here are the ones I think matter most, writes Ejaz Niazi, Head of Business Development at Sovereign Gibraltar.

Multiple Jurisdictions

The biggest shift is that clients no longer live in one country, and this shift is accelerating. Whether it’s entrepreneurs with a business in one country and a family in another, families trying to plan generational transfers across multiple jurisdictions, or overseas investors looking to invest into Europe.

A good business or wealth management structure now has to work in more than one place at once, and it also has to be capable of adapting rapidly to changing circumstances, whether its tax, regulatory or legislative changes, family dynamics, residency relocations or international business expansion.

Multiple Advisers

All these potential factors add complexity and generally lead to one overriding conclusion: no single adviser can do everything. The best outcomes are achieved when a client’s lawyers, investment managers, tax advisers and implementation partners work together from the start.

That is how Sovereign prefers to work. We sit alongside a client’s existing advisers, not in place of them, and take care of the practical side: setting up or reorganising structures like companies and trusts, assisting with banking and residency options, and providing the ongoing administration and governance that keeps the client secure and in good standing, while delivering the international efficiencies that they require.

Local Delivery

After almost four decades in business, we know how much more smoothley things go when everyone is pulling in the same direction. And when a client’s affairs span several countries, it helps to have one point of contact who can deliver locally.

Sovereign opened its first office in Gibraltar in 1987. Today we have teams across Europe, the Middle East, Africa and Asia, including long-established offices in Portugal, Malta, Cyprus, the Isle of Man, the UK, Hong Kong, Singapore, the UAE and Mauritius. That means we can support a client across multiple jurisdictions and regions without them having to start from scratch each time and, in most cases, we can work with them in their own language.

The Right Location

Interest in residency continues to grow, and the reasons behind it are broadening. Yes, tax is part of it. But more and more, families are also thinking about security, ease of travel, education, healthcare and their quality of life as a whole. The right location will depend on a client’s priorities, not just the potential fiscal efficiencies.

One point is often misunderstood. Residence and tax residence are not the same thing. Holding residence in one country does not, on its own, decide where a person pays tax. Time spent elsewhere, a home in another country or close family ties can all change the picture. Getting this right from the outset, with the correct tax advice alongside, is essential and will avoid problems further down the line.

The Gibraltar advantage

From where I sit, Gibraltar remains a compelling option for internationally mobile families looking for a European base. It offers English common law, low rates of tax, a well-regulated financial centre, and southern Spain is right on the doorstep with access to the whole European continent. It is also, of course, a gateway to the Mediterranean and north Africa

The historic new UK–EU Agreement in respect of Gibraltar, brought into force in July, has finally unpicked the unique set of issues posed after Brexit and provides certainty going forward. The physical barriers and routine immigration checks at the Gibraltar-Spain land border have disappeared, allowing people and goods to move across it far more easily.

For anyone with family members or property across the border, careful planning around time spent in Spain will always be required, and this works best when advisers on both sides plan it together.

No shortcuts

Running through all of this is another broad trend. Clients are thinking longer term and multinational exchange of information and minimum substance requirements means that taking short cuts is no longer an option.

There is far less appetite for anything that does not make genuine commercial sense, and far more focus on transparency, substance and getting things right from day one. In particular, the direction and management of any commercial or personal structures must take place, and be properly documented, in the place where they are located. That suits us. It is how we have always worked.

Cross-border lives and cross-border businesses need joined-up advice and given the complexities of today’s world, that is unlikely to come from just one source. To understand the bigger picture and secure the best outcomes, clients need advisers and implementors who are prepared to plan and work together.

That is where Sovereign can help, whether a client is setting up a business, structuring family wealth or planning a move. If you would like to talk about how we can support you or your clients, you can reach me below or call the Gibraltar office on +350 200 76173.

This article is for general information only and does not constitute legal, tax or other professional advice. Specific advice should be taken in each relevant jurisdiction.