The Spanish town of La Linea may be a post-Brexit solution for companies looking to ensure continued access to the European market, according to Nigel Feetham, partner at Hassans International Law Firm.
La Linea’s close proximity to Gibraltar makes it an ideal solution for companies based in the British overseas territory who want to have EU passporting rights and keep their Gibraltar infrastructure.
It was announced in March that the UK government had guaranteed Gibraltar-based financial services firms access to UK markets until 2020, regardless of the Brexit deal.
Brexit will, therefore, not affect Gibraltar-based companies that only write UK business, which according to Feetham constitute the majority of companies licensed in the region.
The announcement confirmed, however, that those Gibraltan companies affected would need to redomicile in order to ensure access to the European market following Brexit, an issue which Feetham has been working on for the last 18 months.
He explained: “I’d been looking at EU solutions for Gibraltar insurance companies that would be affected by Brexit, in other words, a post-Brexit European solution.”
“There are a number of businesses in Gibraltar that either write EU business exclusively or a large part of their portfolio is EU business. These companies need an EU solution.”
Due to its similarities to Gibraltar, such as its similar prudential regime, benign tax environment, and approachable regulator, Malta emerged as an early option.
Insurers domiciled in Malta can currently write insurance in Britain and Europe, however in the event that Britain leaves the single market those operating from Malta will no longer be able to sell insurance into Britain but will have continued access to European markets.
Feetham came up with a “two way Brexit strategy” in which Malta-based companies looking to continue to work in the UK market would move to Gibraltar, and visa versa.
The redomiciliation of the UK-focused motor insurer St Julians Insurance Company in January was evidence of this potential movement.
In late 2017 Feetham realised the potential solution that La Linea could offer companies, by providing access to the European market while allowing them to keep their Gibraltar infrastructure.
He said: “Towards the end of last year I had a eureka moment. Travel between Malta and Gibraltar wasn’t easy.”
“Instead of going to Malta, why not La Linea if they currently have an infrastructure in Gibraltar?”
“Therefore, you are keeping the infrastructure in this area and therefore retaining employment, retaining economic activity, and you’re sharing the benefits of that economic activity with your neighbours–in this case, La Linea.”
“Employees can cross the border, geographically and physically we are talking about a ten-minute walk.”
Feetham said Spanish regulators have been very accepting of the idea so far and the country has redomiciliation legislation which is a “huge advantage”.
According to the Hassans’ partner, the idea could be taken a step further and could be a solution for London-based insurers.
He said: “You can move the goalposts further. London has a problem, they need a solution. I can offer a solution that is Gibraltar and La Linea.”
“That is where you then get into the concept of a join financial hub between Gibraltar and La Linea, feeding off each other.”
“London has traditionally has been very close to Gibraltar, particularly the insurance sector, so they could continue to plug into the Gibraltar infrastructure as they have done in the past and you add in La Linea to that–so you have a three-way solution, Gibraltar, Malta, La Linea.”
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