After several years of uncertainty when Gibraltar’s financial community stopped offering Qualifying Recognised Overseas Pension Schemes (QROPS), providers have upped the number of pensions for expats.
QROPS allow British retirement savers and international workers with UK pension rights to move their pension pots to another country – but the pot must be moved to a scheme which is recognised as being QROPS compliant by HM Revenue and Customs (HMRC).
The idea is that when someone moves to another country to draw their pension they will be taxed at that country’s rates.
In 2009, Gibraltar based QROPS providers ran into trouble with HMRC over QROPS pension rules – they were taxed at a flat rate of 0% which HMRC said wasn’t a valid tax rate – so providers pulled their offerings to sort out the problem.
Now the schemes are back – with more providers moving in offering a range of expat pensions – after satisfying HMRC criteria and a flat rate of 2.5% is being charged.
This is our quick FAQ guide to Gibraltar QROPS:
Who stands to benefit the most?
Experts say that expats living and working in Asia, the Middle East and those countries that have ‘restrictive double taxation’ measures.
Should I choose Gibraltar or Malta for my QROPS?
The tax rate of 2.5% is favourable for expats where someone with a QROPS in Malta could face a 30% tax charge if they live in a country that doesn’t have a double taxation agreement in place with the Maltese.
How safe will my money be?
Anyone moving their pension pot to Gibraltar should be reassured with the voluntary code of conduct which has been created by QROPS providers there though it looks likely that this will be replaced by a government-enforced version next year.
It is now safe to transfer my QROPS to Gibraltar?
Yes, HMRC has confirmed that Gibraltar’s new rules in place to satisfy their criteria.
When can I retire?
Using a Gibraltar QROPS, a member can retire at the age of 55 years old.
How will the money be invested?
Gibraltar QROPS are invested in wider range of asset classes including equities, government bonds, currencies, structured financial products and their derivatives, gold bars and property that is leased back the pension member or his/her own company.
How expensive are Gibraltar QROPS?
Costs vary between providers, but one firm is offering a Gibraltar ‘lite’ package which has a set-up fee of £750 for pension pots of less than £100,000.
If you would like to be put in touch with a qualified financial adviser, please contact us via the contact form here for a referral.