QROPS Aruba. Brits and Dutch Can Now Avoid Tax in Aruba
British expats living in Aruba or wishing to retire in Aruba can now transfer their pension into a QROPS Aruba to maximize pension tax relief. British expats living in Aruba can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like Gibraltar, a British Overseas Territory and will no longer have to pay UK taxes on their pension if they stay offshore. Dutch expats who have worked in the UK and British expats in Aruba can transfer to a QROPS to avoid UK taxes. In fact, Dutch people can also transfer any Dutch private pensions they have into a QROPS as well to avoid Dutch taxation on their pension.
Where is Aruba?
Aruba is a 33 km-long island of the Lesser Antilles in the southern Caribbean Sea, located 27 km north of the coast of Venezuela and 130 km east of Guajira Peninsula (Colombia). Together with Bonaire and Curaçao, it forms a group referred to as the ABC islands of the Leeward Antilles, the southern island chain of the Lesser Antilles.
Aruba is a part of the Kingdom of the Netherlands which is made up of Aruba, Curaçao, Saint Maarten and the Netherlands. The citizens all have the same nationality, that of a Dutch citizen. Approximately 105,000 people live in Aruba.
Why live or retire in Aruba as a British expat?
Aruba is widely known for its white, sandy beaches on the western and southern coasts of the island, relatively sheltered from storms and this is where most of the tourist development has taken place. Aruba has a semi-arid climate, but has a nice breeze from the Atlantic to cool it down. Average temperatures are more than 30 Degrees Centigrade. Aruba’s population is estimated to be 80% Mestizo and 20% made up of other races. Arawaks speak “broken Spanish” which their ancestors had learned on Hispaniola. Nowadays, There are more than 92 different nationalities who live on the island, so cultures and traditions are varied. British, Dutch and Latino traditions live on Aruba.
Carnival is the big holiday in Aruba, as it is in many Caribbean and Latin American countries. It goes on for weeks, much like Mardi Gras in the U.S. Carnival starts at the beginning of January until the Tuesday before Ash Wednesday. The official languages are Dutch and Papiamento. Although English and Spanish are also spoken.
Benefits of a QROPS Aruba Pension Transfer
What are the benefits of a QROPS Aruba Pension Transfer for Brits in Aruba?
• Currency choice. You can choose to have your pension transferred to a QROPS denominated in USD, EUR or keep it in GBP
• Have the ability to make higher returns with freedom of investment
• Family Protection: Upon death, the entire pension pot gets passed on to your nearest and dearest
• Security: The pension is held in a secure jurisdiction such as Gibraltar which is under the protection of the British crown and has its own strong financial regulations which are tax efficient
What is the Currency in Aruba
Aruba’s currency is the Aruban Florin (AFL or AWG). The exchange rate for 1 USD is around 1.75 AFL. So, if you are moving to Aruba as a Dutch or British expats, you may be better off transferring your pension into USD, depending on the exchange rate.
What is QROPS Aruba?
A Qualifying Recognized Overseas Pension Scheme (QROPS Aruba) allows your UK pension to be transferred offshore to reduce your tax burden. Effectively, you will no longer pay UK tax on your pension as long as you have been offshore for 10 years. You can still move your pension even if you have not been offshore yet, but the benefits only kick in after 10 years.
If you are living in Aruba at the moment, you can take advantage of your offshore address in order to move your UK pension into a QROPS to avoid further UK taxes down the line. A QROPS can be a great vehicle to avoid UK taxes if you are considering living or retiring abroad.
Tax on a QROPS in Aruba
Personal Income Tax in Aruba
If you are resident in Aruba, you pay income tax on your worldwide income. This is taxed at progressive rates of between 7.40% and 58.95%. Their are deductions for pension premium, life insurance premium, interests paid on debts, certain gifts, and extraordinary for sickness or invalidity, subsistence costs for certain relatives and the burial costs of relatives as well as a personal allowance before taxes are deducted. You can find more at Aruba’s economic affairs site.
You can choose for your QROPS to be paid into an offshore account or into a bank account in Aruba. Your QROPS will be taxed at source at a flat rate of 2.5%. This will avoid UK taxation. It will then be taxed on remittance to Aruba.
Transferring your pension to QROPS Aruba as a British or Dutch Expat
Do I need to move my pension to Aruba?
No. Your pension can be transferred to a secure jurisdiction such as Gibraltar where it will be out of the UK tax system and your pension will grow tax free. There are no QROPS in Aruba as such, so the best bet may be a move to Gibraltar where it will be outside the UK or Dutch tax system, so you can pass the whole lot onto your families upon death.
Do I need to live and retire in Aruba?
No, you can live anywhere offshore. As long as you are outside the UK, your QROPS will grow free of UK tax. If you ever return to live permanently in the UK, your pension will return to UK Self Invested Personal Pension (SIPP) rules.
For enquiries, please send email to firstname.lastname@example.org
Pension tax relief for UK expats, QROPS Aruba article written by QROPS Specialists.QROPS Aruba Pension Transfer for British Expats and Dutch Expats by Richard Malpass