Isle of Man QROPS are going back to basics after the recent HM Revenue & Customs tax crack down closed some offshore pensions to new business.
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HMRC delisted 18 Isle of Man QROPs out of 191 schemes for failing to meet new qualifying regulations on April 6 – delisting effectively closed them to accepting new business.
Several of the schemes were operating under the offshore financial centre’s 50c pension laws that purported to pay more than the required 70% of the retirement fund as a tax-free lump sum.
Now, pension providers on the Isle of Man have dropped their 50c schemes and restarted marketing their tried and test EET scheme as QROPS.
EET – short for Exempt Exempt Tax – is an accepted European Union pension standard that includes QROPS.
Pensions running as EETs offer exempt contributions, exempt investment income and capital gains and taxed benefits.
Crucially, paying taxed benefits to residents and non-residents at the same or similar rates is a key factor under the new HMRC QROPS regime.
Basically, the Isle of Man has reverted to an offshore pensions formula that is proven to comply as a QROPS rather than continuing to push the envelope with creative tax enhancements.
One provider has already discussed launching the new Isle of Man QROPS in the Middle East, Asia and Africa.
The move is part of the ‘old guard’ of QROPS pensions who were hit badly by HMRC’s new tax rules to reestablish their place in a lucrative market as other offshore financial centres like Malta and Gibraltar seek to grab an increased share of business.
HMRC is in discussions with Guernsey QROPS providers and tax authorities about relisting some resident only and public sector schemes out of just over 300 that were closed to new business in April.