Gibraltar as a Jurisdiction for Your AI Investment Fund

Introduction 

We are seeing an artificial intelligence (AI) revolution, a transformative period marked by unprecedented technological advancement and immense investment opportunities. As capital flows into this high-growth sector, the strategic decisions made today will define tomorrow’s market leaders. For fund managers looking to capitalise on the AI boom, choosing the right jurisdiction is key. Gibraltar offers not just a stable and predictable legal framework, but a platform of strategic service providers that are crucial for your success.

Gibraltar offers a unique blend of regulatory agility, fiscal efficiency, price transparency and a forward-thinking ecosystem of service providers. At Ramparts, we combine our expertise as a leading law firm and as a specialist fund administrator to guide clients through the complexities of establishing and managing AI funds in this dynamic environment. 

This article delves into why Gibraltar stands out as the optimal jurisdiction for you as a fund manager and for your AI fund and explores some of the major issues you need to consider.

“In 2024, U.S. private AI investment grew to $109.1 billion—nearly 12 times China’s $9.3 billion and 24 times the U.K.’s $4.5 billion. Generative AI saw particularly strong momentum, attracting $33.9 billion globally in private investment—an 18.7% increase from 2023. AI business usage is also accelerating: 78% of organizations reported using AI in 2024, up from 55% the year before. Meanwhile, a growing body of research confirms that AI boosts productivity and, in most cases, helps narrow skill gaps across the workforce.”

(Stanford University, Human-Centred Artificial Intelligence (HAI) 2025 AI Index Report)

The AI Investment Landscape: Navigating High Growth and Emerging Risks

The global AI investment landscape is characterised by explosive growth and a notable concentration of capital, particularly in the United States. In 2024, private AI investment reached a staggering $252.3 billion, a thirteenfold expansion since 2014, with a year-over-year increase of 44.5%. Generative AI, in particular, has become a powerhouse, attracting $33.9 billion in private investment in 2024—over 8.5 times its 2022 levels and now constituting more than 20% of all AI-related private investment. This intense interest has led to astounding valuations for private AI firms, illustrating a “winner-takes-all” mentality where investors rush to avoid missing out on the next market heavyweights.

However, this investment frenzy is tempered by a critical divergence between the scale of investment and current tangible financial returns, often referred to as the “capability-reliability gap”. While over $500 billion has been poured into AI, combined revenues total only about $35 billion, raising concerns of a potential “AI bubble” reminiscent of the dot-com era. Furthermore, AI isn’t yet consistently boosting real-world productivity, with some research indicating it can even slow down experienced professionals. This suggests that current market valuations are built on speculative expectations rather than proven commercial results, making a highly selective and rigorous due diligence process crucial for AI fund managers.

Beyond the hype, the AI investment thesis is diversifying into foundational technologies and infrastructure, such as semiconductors and data centres, which are less susceptible to the failure of a single AI application. Other key areas attracting investment include quantum computing, robotics, biotech, medtech, and automation. 

A significant trend is applied AI, where companies embed AI into their existing operations across sectors like financial services (algorithmic trading, fraud detection), healthcare (disease diagnosis), and logistics (supply chain optimisation). This shift offers investors diversification and exposure to high-growth areas beyond pure-play tech, moving from speculative software to fundamental, infrastructure-based, and application-specific opportunities.

Fund managers must also make core strategic investment decisions regarding public versus private companies and capital growth versus dividend-bearing strategies. While public markets offer liquidity and transparency, they miss out on the immense capital appreciation that occurs during a company’s private growth phase. Private markets, conversely, carry higher risks and illiquidity but offer enormous growth potential, akin to investing in tech giants before their IPOs. 

“Private tech companies valued above $1B (~1,300 companies) now represent roughly $4.7T in aggregate value—about ~15% of the entire Nasdaq market cap, and closer to ~40% if you exclude the Magnificent 7.”

(David George, ‘Private Markets Are The New High-Growth Public Markets’, Andreessen Horowitz a16z)

With companies staying private longer (the median age at IPO has jumped from 4 to 12 years), a substantial portion of value creation now happens pre-listing, leading to a massive secondary market. For extraordinary upside, a primary focus on private investments is essential. Given the capital-intensive nature of AI development, a capital growth strategy, which reinvests cash flow for expansion, is inherently aligned with the sector’s high-risk nature, making pure-play AI funds primarily long term focused capital growth vehicles.

The Evolving Legal and Ethical Frontier of AI

The rapid development and deployment of AI are taking place within a legal and political environment that is still in its infancy and evolving at a rapid pace. Regulatory ambiguity means a company’s core technology could be rendered obsolete or illegal by new regulations. AI systems also introduce new risks, including data privacy and security vulnerabilities, with cybercriminals leveraging public AI tools for sophisticated malware, phishing, and “deepfakes”. This necessitates a “proactive and holistic approach to legal regulatory risk management”.

Traditional financial and legal due diligence is insufficient for AI companies. The process must be multidisciplinary, incorporating expertise in AI technologies, coding, data science, legal frameworks, and financial analysis, treating the target company’s AI system as an asset to be audited including:

• Technical Capabilities: Evaluating AI models for scalability, adaptability, and performance, along with the quality and integrity of data inputs.
• Bias and Fairness: Investigating biased training data and mechanisms for correction, particularly in sensitive applications like hiring or lending.
• Robustness and Security: Assessing measures to protect AI data and algorithms from manipulation or theft, including data encryption and safe handling practices.
• Ethics and Compliance: Verifying adherence to privacy laws like GDPR, data anonymisation, and user consent policies.
• Accountability and Transparency: Ensuring AI systems provide clear explanations for decisions, avoiding “black box” scenarios.
• Governance and Responsible AI: Confirming the presence of ethical guidelines and accountability standards for AI usage.
• Employee Skills and Integration: Assessing the team’s ability to manage AI systems post-acquisition.

This specialised due diligence serves as a significant barrier to entry for competitors and a key value proposition for a fund and its managers.

Gibraltar’s Unmatched Advantage for AI Funds: Why Ramparts is Your Ideal Partner

Choosing Gibraltar as your AI fund domicile offers a strategic edge, we are a well-respected financial centre with a dynamic approach to innovation. For example, Gibraltar is ranked in the top 3 jurisdictions in the world for crypto fund managers. 

Ramparts leverages Gibraltar’s unique attributes to provide a robust and efficient framework for your AI investment vehicle.

Strategic Domicile and Post-Brexit Agility: Gibraltar, an English common-law jurisdiction, offers legal certainty, a mature tax environment, competitive costs, and proportionate regulation. Its post-Brexit status  allows it to maintain access to the UK markets while enabling fund managers to opt to be in or outside of the scope of the Alternative Investment Fund Managers Directive (AIFMD). This position grants greater regulatory flexibility and a streamlined setup process compared to more complex European fund centres.

A Proactive Hub for Digital Innovation: Gibraltar has a proven track record of proactively shaping its regulatory environment to attract innovative industries, notably with its Distributed Ledger Technology (DLT) Regulatory Framework in 2018, which positioned it as a credible centre for digital assets. This proactive stance extends to its approach to the adoption and investment in AI. 

The Ideal Vehicle: The Experienced Investor Fund (EIF): At the core of Gibraltar’s proposition is the Experienced Investor Fund (EIF), a highly flexible and cost-effective solution for sophisticated investors, which has become the premier choice for innovative investment strategies, including AI. Ramparts can assist in establishing EIFs efficiently.

• Remarkable Speed-to-Market: The EIF regime is unique on the European continent for its “launch-and-notify” procedure. A fund can begin capital raising and investment activities without prior GFSC approval, based on a legal opinion from a senior Gibraltar lawyer and the appointment of two authorised directors. This process allows for a fund to be set up in as little as 6 to 8 weeks, providing a critical operational advantage in the fast-moving AI sector.
• Unparalleled Flexibility: The EIF offers no statutory restrictions on investment types, diversification requirements, or leverage limitations. This is profoundly beneficial for AI funds, which may pursue highly concentrated strategies in specific technologies, intellectual property, or illiquid private equity ventures.
• Lean Regulatory Overhead: EIFs require two Gibraltar-resident GFSC approved directors, an annual audit and a regular fund administrator. Larger EIF’s can opt out of the AIFM requirements for above threshold funds and therefore do not require a custodian or depositary, reducing significant costs and complexity. 
• Protected Cell Companies (PCCs): For multi-strategy AI funds, PCCs or Protected Cell Limited Partnerships (PCLPs) allow for the legal segregation of assets and liabilities across different investment theses, such as a “generative AI” cell and a “deep tech robotics” cell.
• Private Fund Alternative: Ramparts can also help establish a Private Fund, which can be offered to a defined group of up to 50 investors and can be set up quickly and cost-effectively. Private funds are not required to have audited accounts if they meet specific “small company” criteria, which funds often do. This provides a clear progression, allowing managers to test the market before converting to a larger regulated EIF to scale up their fund.
• AIFMD Opt-Out: For funds exceeding the AIFMD thresholds (€100m for leveraged/open-ended funds or €500m for unleveraged/closed-ended funds with no investor redemption rights for at least five years), Gibraltar offers an opt-out to EIFs from many of the more burdensome requirements of the full-scope AIFM regime – such as full capital adequacy requirements, the need for a depositary, comprehensive risk management systems, and detailed remuneration policies.

Fiscal and Financial Benefits (Enabled by Ramparts’ Expertise): Gibraltar’s fiscal appeal lies in its transparent and internationally compliant framework.

• Tax Neutral Environment: Gibraltar’s territorial basis of taxation means a company is taxed only on income “accrued in or derived from” Gibraltar. For an international AI fund with a globally diversified portfolio, investment income is unlikely to be taxed, effectively creating a tax-neutral environment for the fund’s activities.
• No Capital Gains Tax: A significant advantage for funds generating profits from asset sales.
• No Dividend Tax or Withholding Tax: Profits can be distributed from Gibraltar tax-free to investors and there is no withholding tax on dividends. The investor may obviously be subject to income, corporate or capital gains tax in their own jurisdiction.
• No Inheritance, Wealth, or Gift Taxes: Offers significant advantages for estate planning.
• Competitive Fund Manager Compensation: Fund managers based in Gibraltar are subject to a flat corporate tax rate of 15% on any trading income (such as management fees) but normally their performance profits can be lawfully structured and defensible as non-taxable income or gain. By way of example, from 6 April 2026, qualifying ‘carried interest’ in the UK will be treated as trading profits, subject to income tax and Class 4 National Insurance contributions. For an additional-rate taxpayer, this results in an effective tax rate of about 34.1% on the gross carried interest. Non-qualifying carry will be taxed at full income tax and NIC rates, which are even higher (up to 47%).

A Maturing AI and Digital Infrastructure Ecosystem: Gibraltar’s commitment extends beyond legal frameworks to tangible investments in infrastructure.

• Pelagos Data Centre: A planned £1.8 billion, 250MW Pelagos Data Centre is designed to support AI and cloud computing demands, providing the physical bedrock for computational power and data storage required by AI funds and their portfolio companies.
• AI Adoption in Key Industries: Gibraltar’s financial ecosystem (insurance, gaming, fintech) is already a hotbed for AI adoption, using AI for underwriting, fraud detection, personalised offers, and accelerated due diligence. This creates a vibrant, interconnected ecosystem with a local talent pool, professional service providers familiar with AI, and a regulator gaining hands-on experience.

Critical Considerations for Setting Up Your AI Fund in Gibraltar

While Gibraltar offers compelling advantages, setting up an AI fund requires careful consideration of several key issues, where Ramparts’ expertise proves invaluable.

• Regulatory Nuances and AIFMD Thresholds: Understanding the AIFMD framework is crucial, particularly the distinction between “small-scale” and “full-scope” AIFMs. For example, Ramparts provides detailed guidance on hedging criteria to ensure fund managers understand when derivatives qualify as hedging arrangements and do not trigger the lower AUM threshold. Inaccurate modelling can lead to unexpected transitions to the full-scope regime, incurring significantly higher operational and financial burdens.
• Fund Status (Open vs. Closed-ended): The distinction hinges on the “fact of redemption” at an investor’s request.
• Comprehensive Due Diligence: The unique legal and ethical risks of AI demand a multidisciplinary due diligence approach. Ramparts can assist clients in conducting this granular assessment of a target company.
• Banking, Payments, and Auditing: Securing reliable banking, payment solutions, and auditors can be particularly challenging in the crypto/AI sector. Ramparts, as a licensed fund administrator, works closely with clients to identify suitable banks and payment partners, assisting with account opening and ensuring compliance with KYC/AML/CTF regulations, Common Reporting Standards (CRS), and FATCA requirements. 
• Taxation Strategies and Anti-Avoidance: While Gibraltar offers significant tax advantages, effective structuring is critical.

• Fund and Fund Manager Taxation: Ramparts ensures that the fund’s growth in capital from investments is treated as capital gains, thus not taxable in Gibraltar. For fund managers, we work with the investment director to structure compensation tax efficiently in a robust defensible manner.
• Anti-Avoidance Rules: Clients must be aware of Gibraltar’s general anti-abuse provisions (s.40 of the Income Tax Act) which allow the Commissioner to disregard artificial or fictitious arrangements designed to eliminate or reduce tax. 

Your Seamless Path to Launch with Ramparts

Establishing an AI fund in Gibraltar is a streamlined and transparent process with Ramparts as your expert legal and administrative partner. The journey typically begins with an initial consultation and a recommended pre-application meeting with the GFSC to discuss your business model and address any regulatory concerns early on.

Ramparts provides comprehensive, integrated services covering every step:

1. Legal & Structural Advice: We can advise on the optimal fund structure (EIF, Private Fund, PCC) and draft all essential documents, including the offering memorandum, articles of association, and other corporate documents. Alternatively, we can work with your chosen trusted legal advisors in Gibraltar and focus purely on fund administration services. At Ramparts we also regularly work with other Gibraltar law firms to help get funds launched and operating.
2. Professional Appointments: We facilitate the appointment of key service providers, including a Gibraltar-based fund administrator, auditor, and at least two licensed EIF directors. 
3. Launch & Post-Launch Filing: Leveraging the EIF’s “launch-and-notify” procedure, the fund is launched swiftly based on a suitable legal opinion, with required documentation submitted to the GFSC for registration within 10 business days.
4. Ongoing Administration: As a regulated fund administrator, Ramparts provides continuous support, including Net Asset Value (NAV) calculation, financial accounting, tax return preparation, anti-money laundering (AML) compliance, investor communications, and regulatory liaison. 

Ramparts –  Gibraltar Fund Administrator

We administer funds with over $800m in NAV and specialise in high technology sector fund administration.

Gibraltar offers a compelling and robust platform for AI fund managers: the speed and flexibility of a premier offshore centre, the reputational integrity of an OECD-compliant jurisdiction, a competitive tax environment, and a tangible commitment to AI infrastructure. 

With Ramparts, you gain a partner that provides the strategic guidance, legal expertise, and administrative support necessary to navigate the complexities of the AI investment landscape, ensuring an efficient and compliant launch for your fund. We are not just a service provider; we are an integral part of your success in capturing the immense, long-term potential of the artificial intelligence revolution.

AI Law Knowledge Hub

I have started an AI Law Knowledge Hub on our site to try to keep track of the main legal and ethical issues as the space evolves.