Welcome!Welcome!• The British-Portuguese

Chamber of Commerce• The Swedish-Portuguese

Chamber of Commerce

Pierre B. BoulleManaging Director

21st June 2005 PresentationFarol Design Hotel,

Av. Rei Humberto II de Itália, 72750-461 - Cascais - Portugal,

GGiibralbraltartar

• Regulated by the FSC,Regulated by the FSC, Counterpart of the FSACounterpart of the FSA

www.fsc.gi• Investor Compensation SchemeInvestor Compensation Scheme MemberMember www.gics.gi• £1 Million £1 Million Professional Liability InsuranceProfessional Liability Insurance

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GGiibralbraltartar ●●One of the Pillars of One of the Pillars of HerculesHercules

●● Monte Hacho, Ceuta, the Monte Hacho, Ceuta, the otherother

●● GGiibraltar, Offshore braltar, Offshore PortalPortal

• EU COUNCIL DIRECTIVE 2003/48/ECCOUNCIL DIRECTIVE 2003/48/EC•Taxation of savings income (interest payments)• GGiibraltar braltar law - 21st July 2004• Compliance: individual Governments• No Federal Policing Authority in Europe… yet!

•applicable if applicable if ’paying agent’paying agent’ resident in EU’ resident in EU•‘‘Interest paymentInterest payment’ as defined in Article 6’ as defined in Article 6

Is tax free trading from an offshore possible

after July 2005?

Taxation (Savings income) Ordinance 2004:Taxation (Savings income) Ordinance 2004:Paying Agent: Paying Agent:

‘Any economic operator who pays interest to or secures the payment of interest for the immediate benefit of a beneficial owner’Any entity established in a Member State to which interest is paid or for which interest is secured for the benefit of a beneficial owner.

Competent Authority/Exchange of Information :Competent Authority/Exchange of Information :Paying agents would provide the competent authority in their jurisdiction with the information required to be provided by the legislation. The competent authority would thereafter transmit the information to the competent authority of the Member State of residence of the beneficial owner (within six months following the end of the tax year in which the payment was made.)

Interest payments :Interest payments :Interest on debt claimsInterest accrued or capitalised at the sale, refund or redemption of debt claims; Interest-derived income arising from bond/mixed funds:Income realised on the sale, refund or redemption of units or shares inbond/mixed funds

Identity and residence of beneficial owner:Identity and residence of beneficial owner:Where a paying agent makes an interest payment to an individual whom he believes to be a beneficial owner, the paying agent shall establish theidentity and residence of the beneficial owner.

Information reporting by the paying agent to the competent authority :Information reporting by the paying agent to the competent authority :The identity and residence of the beneficial ownerThe name and address of the paying agentThe account number of the beneficial owner or identification of the debt claim Information concerning the interest payment

Where does Where does GGiibraltarbraltar stand in all stand in all this?this?

•No, not at all.No, not at all.•Directive only applies Directive only applies to individuals, to individuals, notnot to to companies. companies. •Why only individuals?Why only individuals?•And anyway there is a And anyway there is a transitional period…transitional period…

Is this the end of Financial Is this the end of Financial Markets as we know them!?Markets as we know them!?

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Transitional Period: till 31st December 2010:

- Domestic & International Bonds and ‘other’ negotiable debt instruments

- issued or their prospectus approved by ‘competent’ authorities before 1 March 2001

- issued by ‘responsible’ authorities in third countries provided no further issues of such negotiable debt securities on or after 1st March 2002

Article 15 of Directive:Negotiable Debt Securities

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• Offshore trading will continue, but only till 2010 for debt interest products• Other financial products not included• ThinThin end of the wedge. • Interest now, capital gains on stocks next?• This is clearly a dummy run…• Success in policing of Directive…will

determine how fast Eurocrats & EU Tax Authorities push forward into other areas.

So what’s all the Fuss about?So what’s all the Fuss about?Life goes on…Life goes on…

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– Upping the Ante, greater cost for ‘ordinary’ citizens wishing to mitigate tax.

– Wealthier investors - nil effect– Herding Effect: ignorance and fear is driving

more investors to buying offshore structures, unnecessarily.

– More business for well run offshores; even more business for more opaque offshores

– Offshore role: greater legitimacy – Trading Accounts: no more interest paid.

Cheaper for investors than paying for an offshore to avoid any possible repercussions…

What collateral damageWhat collateral damagecan we expect as a result?can we expect as a result?

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What do Offshore Brokers do now?

• Nothing much, for the moment. Life goes on, just as before, with a few adjustments …

– Greater specialisation in tax/ trading issues fundamental.

– Convergence: offshore Financial institutions, lawyers and Company Managers – Long Term

– Turnkey approach to offshore trading:

• Offshore Company• Offshore Trading Platform• Offshore settlement

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Technology and Reinvention

• TECHNOLOGY: Key battleground of the future.– Traceless online trading has come of age– All the technological apparel for remote offshore trading exists & has come of age and is almost impossible to track, for the moment…

• REINVENTION/ RETOOLING: – You can’t keep a good product down: instruments of debt -

you can bet your bottom Euro that new products will pop out of the woodwork within weeks of the Directive coming into force.

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investorseurope,944 EuroportGibraltarT +350 40303 F +350 51795info@investorseurope.com

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