Guernsey QROPS News. Guernsey to Re-Open QROPS Trade
Guernsey hope to re-open QROPS trade after making some changes to their older QROPS scheme, the 157A. Gavin St Pier, the Guernsey Treasury Minister, has unveiled a package of alterations to the way certain kinds of pension schemes on the island are taxed, in an attempt to restore the Guernsey QROPS industry which is losing out to Malta and New Zealand in the battle for QROPS supremacy. Since HMRC introduced their changes, 310 of 313 Guernsey QROPS were taken off HMRC’s list of QROPS schemes from their web site. Since then, many QROPS providers have been looking to move to Malta to set up new schemes. The new changes to Guernsey rules should restore some confidence to the Guernsey schemes.
The changes will, among other things, prevent any new Guernsey 157E schemes from being approved, or any additional transfers or contributions being made into existing S157E entities. The 157E scheme was similar to the Isle of Man 50c scheme which was also delisted; both allowed more than a 30% lump sum to be taken from the scheme. The 157E scheme is now defunct and the old 157A schemes will be resurrected.
The 157A QROPS schemes in Guernsey will be in force, but will have some additional taxing provisions relating to the transferred pensions of non- residents; the assumption is that there will be grandfathering provisions for pre-April 6th non-resident transferees.
Guernsey QROPS News. Reverting Back to 157A QROPS Scheme
In a 27 June presentation to Guernsey legislators, St Pier said his department had been reviewing its options in the wake of those unexpected 4 May regulations.
“Following consideration by my department of the need for a robust pension regime going forward, one aspect of which must be to ensure the ability for pension schemes to remain QROPS compliant, we have decided to bring proposals to the September States meeting with the intention that, in the case of S157E schemes, will take effect from today….if approved by the Assembly”, St Pier said in his statement, which came in the form of an address to a meeting of the States of Deliberation, and which has been published on the States of Guernsey website.
St Pier did not say what would become of those S157E schemes that were set up in the weeks after the legislation making them possible was passed, and before HMRC unexepectedly declared that they were not eligible for QROPS status.
It is understood that a considerable number of Guernsey’s existing QROP schemes were turned into S157E schemes in order to enable them to address a HMRC concern known as “Condition 4” which stipulated that that all jurisdictions in which QROPS are administered must grant the same exemption from tax, in respect of benefits, to all members of the schemes, irrespective of where the member is resident. Following the HMRC changes in May, many schemes are already understood to have revoked their 157E status, in favour of reverting back to the old 157A.
Latest Guernsey QROPS News. The Revised QROPS Plan for Guernsey
The St. Pier plan suggests that Guernsey taxes all payments from a Guernsey pension at the domestic rate of tax (currently 20%) but allows for an exemption on certain lump sum payments in order to create the ability to revive a tax free [benefits commencement] lump sum of 30%.
The net result is 20% tax on pension income, with a 30% tax free lump sum, irrespective of the members residence. It also proposes the closure of the S157E schemes to new business.
So, for expats living in countries with Double Taxation Agreements with Malta or New Zealand, the preferred QROPS choice would still likely be a transfer to a Malta or New Zealand QROPS for maximum tax effiency.