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Ellul & Co. Trustees Limited is a regulated professional trustee (authorised by the GFSC, and this is the entity we use to provide our trustee services. In this page, we will provide further information on:

  • Gibraltar Trusts;
  • Purpose Trusts; and
  • Private Trust Companies.

Gibraltar Trusts

Gibraltar Trusts Law

Trusts may be created in Gibraltar under the Trustee Act which is based on the English Trustee Act of 1893. There is no legal requirement to register Trusts in Gibraltar although voluntary registration is possible.


A trust is considered resident in Gibraltar where it has one or more beneficiaries who are ordinarily resident for tax purposes in Gibraltar. A Gibraltar resident trust is subject to taxation in Gibraltar at the rate of 12.5%.

A Gibraltar trust which has non-resident beneficiaries is not subject to taxation in Gibraltar and all of its income (with the exception of Gibraltar rental income, income from a trade, business, profession or vocation which has accrued in and derived from Gibraltar) may be accumulated free of tax in Gibraltar.

Legal Structure & Key Role-Holders

A trust (a “Trust”) is a legal arrangement whereby certain assets are placed under the control of trustees (“Trustees”) for the benefit of certain persons (“Beneficiaries”). This arrangement is established by means of a trust deed (“Trust Deed”).

Although completely different legal structures, the comparable terms in a company would be as follows:

  • Trust – Company
  • Trustees – Directors
  • Beneficiaries – Shareholders
  • Trust Deed – Constitutional documents of a company

A Trust is, of course, different and the above comparison is made for illustrative purposes only to give persons unfamiliar with Trusts a starting point to be able to understand them.

A Trust will usually also have a settlor (“Settlor”) which is the person (or persons) who donate assets (“Assets”) to a Trust. Such donation is called a settlement and can consist of, most commonly, money, real property, shares or any other assets of whatsoever nature.

The Settlor can settle Assets at the beginning when the Trust is established and also at any other time during the life of the Trust.

The Assets are then administered by the appointed Trustees for the benefit of Beneficiaries named in the Trust Deed. Sometimes a Trust is discretionary in its nature in that the Trustees have the power to appoint and remove Beneficiaries. The Trustees will be guided by the wishes of the Settlor in this regard when the Trust is initially set up.

In some ways, a Trust can be seen as a “living will”. In life, a Settlor can transfer Assets under the control of the Trustees and set out terms in the Trust Deed as to how these should be dealt with.

The result of settling Assets on the Trust is that legal ownership passes from the Settlor to the Trustees who will then manage these in accordance with the terms of the Trust Deed.

Upon the occurrence of a pre-determined event, such as the Beneficiaries attaining a certain age, or the Settlor passing away, the Trustees will transfer the Assets to the Beneficiaries plus any income earned from their investment. Until such time, it is possible for the Settlor to receive, for example, the income generated from monetary investments. They would normally not, however, be able to have access to the capital.

Pending the occurrence of such event, the Trustees are under a strict duty to administer the Trust Assets in accordance with the terms set out in the Trust Deed and to exercise a high degree of prudence and caution.


The Settlor may wish to appoint a Protector of the Trust. They would normally be a person who enjoys the confidence of the Settlor and will control and supervise the exercise of the powers of the Trustees.

On important matters, such as the addition or removal of Beneficiaries or the payment of a distribution, such powers cannot be exercised by the Trustees without the explicit consent of the Protector.

The Protector will frequently also have the power to remove and appoint Trustees.

Purpose Trusts

The Purpose Trusts Act 2015 (the “Act”) provides for the establishment of trusts for non-charitable purposes.

Historically, subject to limited exceptions, only trusts which had identifiable beneficiaries were recognised as valid, the rationale being that identifiable beneficiaries were required to enforce the trust against the trustees, that is, to ensure the trustees were administering the trust and discharging their duties properly. The Act contains provisions for the enforcement of purpose trusts (“Purpose Trust(s)”).

Therefore, under the Act, trustees may hold property on trust to carry out any specific purpose or purposes.

Any individual or corporate entity may create a Purpose Trust for any purpose or purposes providing the purposes are capable of being carried out and not contrary to public policy or unlawful. At least one of the trustees must be a licensed trustee. The trust instrument must appoint an enforcer and provide for the appointment of another enforcer on any occasion in which there is none. The Enforcer has an important role in ensuring that the purpose of the Purpose Trust are fulfilled and, typically, has some powers including that to remove and appoint trustees.

Purpose Trusts are exempt from the rule against perpetuities, meaning they may last indefinitely. The instrument which creates the Trust may, however, specify a date or event on which the trust will cease to be a Purpose Trust (a terminating event) and set out how the trust assets will be distributed on the terminating event.

Uses of Purpose Trusts

Section 4(2) of Act sets out the requirements for the purposes (the “Purposes”) of a Gibraltar Purpose Trust to comply with the Act:

“A Purpose Trust must have a purpose or purposes that are–

(a) capable of being carried out;
(b) sufficiently certain to be capable of being carried out;
(c) not contrary to public policy;
(d) not unlawful;
(e) capable, subject to the exercise of any power of accumulation, of consuming the property held upon the trusts of the Purpose Trust;
(f) does not benefit its trustees beyond the payment of fees for so acting as may be expressly provided for in the trust document.”

Due to the lack of individual beneficiaries who have beneficial ownership of the Purpose Trust’s property, a non-charitable purpose trust is very much an “orphan vehicle” or a “non- owed vehicle” which can be used for a number of different types of transactions. A Purpose Trust may be used in a number of ways for commercial, succession or tax planning reasons, including:

Off balance sheet transactions

Where, for example, restrictive covenants have been entered into preventing a particular individual or company investing in certain areas, or companies, the investments may now be held within a Purpose Trust.

Because there are no beneficiaries to the Purpose Trust, a link cannot be established between the investor and the investment. If the trust were set up with a short life, then the assets would revert to the settlor on termination.

Corporate finance/asset financing

Purpose Trusts can be used to segregate investment funds or asset ownership within a subsidiary (as security from the lender) from group risk. They can also be used to hold assets which need to be isolated from commercial transactions.

This is an acceptable form of asset protection. It is becoming common in ship and aircraft finance/construction and in leasing transactions. In all of these cases the trust ends when the loan is satisfied, while in the interim the lender/financiers’ cash flow is protected. The lender is further protected because the ownership of the subsidiary cannot change until the trust is terminated.

Division of voting and economic benefit

It is sometimes necessary to demonstrate that ‘control’ is not vested in a particular entity. Different classes of shares in a company can be created with voting control being in the hands of one party and dividend rights in the hands of another. Thus, voting shares may be placed in a Purpose Trust and the remaining shares held by the party seeking the economic benefit.

Ownership of trust companies

Some settlors of conventional trusts have concerns that control could be transferred to trustees over which a settlor has no influence. A Purpose Trust established to own a family trust company will usually overcome this difficulty. It enables the trustee to carry out its duties independently and gives assurance to the settlor that the board of directors of the trust company can be changed at any time by the shareholders, that is, the Purpose Trust.

Another advantage is that on the death of the settlor the shares of the trust company are outside the settlor’s estate and will therefore not pass to heirs who might otherwise control the trust company in a way not intended by the settlor.

A Purpose Trust can also be used to hold the shares of a private trust company (“PTC”) which acts as trustee of, or otherwise provides trustee-related services to, a settlor’s family trust(s). A Purpose Trust can act as the shareholder of the PTC in place of a settlor and/or of another family member in case where the direct holding of the shares might have tax consequences.

A classic example is the utilisation of a Purpose Trust to hold the shares in a private trust company in an attempt to avoid the professional trustee being viewed as the beneficial owner of the PTC. The Purpose Trust provides a shield between the professional trustee and the private trust company to create some degree of protection from potential liability.


Many structures creating international securitisation which in the past have used a charitable trust can now be set up using a Purpose Trust.

Purpose Trusts cane be used to hold the shares in special purpose vehicles used in connection with securitisations and off-balance sheet transactions, particularly where the parties to the transaction would like the relevant special purpose vehicle to be ‘orphaned’ (have no beneficial owner).

Social Benefits

A trust may have social, though not charitable, objects. A Purpose Trust can be set up for public and private social benefit or philanthropic projects which are not recognised as charitable. For example, supporting a cryptocurrency or blockchain community, the building or maintenance of community facilities or areas, the preservation of monuments, and the furtherance of political purposes.

Investment in family companies

Trustees of a non-Purpose Trust holding shares in family companies where the economic purpose is poor or uncertain, can sometimes experience difficulties. If instead a Purpose Trust were put in place ‘with the purpose of investing in Smith family companies’, the trustees would have no need to be concerned that their actions could be criticised as there are no beneficiaries to do so.

Succession Planning

Purpose Trusts can be used to hold the shares in a family business to aid with succession planning, with the trustees acting neutrally and independently of family dynamics.

Legacy Planning

A person’s legacy differs from their estate in that it represents more than the things a person owns; it embodies their purpose. For example, a person may have dedicated their life to eradicating malaria or supporting an art museum. A Purpose Trust can be used for such purposes.

Three common goals of legacy planning are: (1) perpetual existence; (2) separating the principal of a person’s legacy assets from the revenue those assets generate; and (3) separating the management and control of a person’s legacy assets from the inheritors who benefit economically from the estate. A Purpose Trust can accomplish all three goals.

For example, in a traditional dynasty trust structure, there can be the problem of an ever-increasing pool of potential beneficiaries. Even if the Trustees are given complete discretion with regard to how and when (if at all) to make distributions to beneficiaries, the Trustees of the traditional dynasty trust still have fiduciaries duties to those beneficiaries. As a result, the beneficiaries have legal standing to bring a legal proceedings against the Trustees, which can put pressure on the Trustees or potentially frustrate the legacy plan. With a Purpose Trust, there are no beneficiaries to whom the Trustees owe a fiduciary duty or who have legal standing to bring a claim against the Trustees for any reason.


International recognition must be considered. Will the courts of the jurisdictions of the situs of residence of the settlor and beneficiaries, and any other relevant jurisdictions recognise the Purpose Trust as a valid trust? Those states which have ratified the Hague Convention on trusts have undertaken to recognise trusts ‘for a specified purpose’.


A taxable event occurs on the termination of the trust if the assets revert to the settlor. There may also be tax implications of the initial transfer of assets into the trust. In the case of assets which can physically be removed to Gibraltar, the taxation can be seriously mitigated and, in some circumstances, possibly eliminated altogether.

Private Trust Companies

The Private Trust Company Act (the “PTC Act”) was passed in 2015 and is a valuable addition to Gibraltar’s trust offering, providing regulatory protection which benefits clients seeking to benefit from a higher level of control in the management of a trust and safeguards against fiduciary risk.

While, previously, it was possible for any limited company to act as a trustee, provided it was not engaged in licensable activity, the Private Trust Company Act 2015 sets out specific legislative framework within which the Private Trust Company is formally recognised and can operate.

What is a Private Trust Company (a “PTC”)?

A PTC is a company that is set up for the purpose of undertaking “Connected Trust Business” from or within Gibraltar.

A Company can voluntarily register as a PTC at the office of the Registrar of Companies (Companies House Gibraltar).

What is Connected Trust Business?

Connected Trust Business means the administration of a Trust solely for the benefit of the Settlor and/or for those persons who are known as “Designated Individuals” and also for those persons connected by family ties to the Designated Individual.

Connected Individuals
  1.  For the purpose of the PTC Act, the following persons shall be considered to be a Connected Individual in relation to a Designated Individual:
    (a) his/her spouse or civil partner; and
    (b) the children and remoter issue of the Designated Individual and his/her spouse or civil partner.
  2. For any relationships listed in paragraph 1 that may be established by blood that same relationship may also be established by adoption.
Advantages of a PTC

Appointing a PTC as a trustee of a trust, or group of trusts under the same family, can deliver numerous benefits especially, but not exclusively, for family offices. A PTC is, for example, easily integrated with other family entities such as an existing company or philanthropic organisation, with a view to:

  • consolidating several family trusts under one umbrella for increased efficiency in asset management and protection;
  • retaining more family control over a trust’s investment and distribution decisions;
  • ensuring continuity for families by resolving any trustee successor issues which may arise over the lifetime of a trust;
  • providing more robust protection from fiduciary risk thereby easing liability concerns for individual family members named as trustees; and
  • allowing for long-term structural and administrative flexibility, meaning that a Private Trust Company can adapt to changing family circumstances and wishes.
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