QROPS Bahrain. Avoiding Taxes for British Expats in Bahrain
British expats living in Bahrain or who wish to retire or work in Bahrain or abroad can now transfer their pension into a QROPS Bahrain to maximize pension tax relief. British expats living in Bahrain can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like the Isle of Man or Malta and will no longer have to pay UK taxes on their pension as long as they stay offshore. Both the Isle of Man and Malta both have Double Taxation Agreements with Bahrain, so your pension would be paid out gross, free from tax.
Bahrainis who have worked in the UK who have built up a private pension can also transfer to a QROPS to avoid UK taxation.
The Isle of Man may be a preferable option as a QROPS in Malta only allows 120% of GAD rates as a pension income whereas the Isle of Man QROPS can base it on portfolio returns, which may mean a substantially higher annual pension income withdrawal. However, you would be exposed to a 7.5% income tax upon death in the Isle of Man whereas it would be zero in Malta.
Why live or retire in Bahrain as a British expat?
There is no personal income tax in Bahrain as well as strong employment protection schemes in place. It is estimated that there are about 11,000 Britons in Bahrain. Bahrain, officially the Kingdom of Bahrain (English: Kingdom of the Two Seas), is a small island state near the western shores of the Persian Gulf. It is ruled by the Al Khalifa royal family. The population in 2010 stood at 1,214,705, including 235,108 non-nationals. Formerly an emirate, Bahrain was declared a kingdom in 2002.
Bahrain is an archipelago of 33 islands, the largest being Bahrain Island, at 34 miles long by 11 miles wide. Saudi Arabia lies to the west and is connected to Bahrain by the King Fahd Causeway. Qatar is to the southeast across the Gulf of Bahrain. The planned Qatar Bahrain Causeway will link Bahrain and Qatar and become the world’s longest marine causeway.
Known for its oil and pearls, Bahrain is also home to many large structures, including the Bahrain World Trade Center and the Bahrain Financial Harbour, with a proposal in place to build the 1,022 m (3,353 ft) high Murjan Tower. The Qal’at al-Bahrain (the harbour and capital of the ancient land of Dilmun) was declared a UNESCO World Heritage Site in 2005. The Bahrain Formula One Grand Prix takes place at the Bahrain International Circuit.
If you are living in Bahrain at the moment, you can take advantage of your offshore address in order to move your UK pension into a QROPS Bahrain to avoid further UK taxes down the line. A QROPS Bahrain pension transfer is the perfect vehicle to avoid UK taxes if you are considering living or retiring abroad.
QROPS Bahrain. The Benefits of a QROPS for British Expatriates in Bahrain
What are the benefits of a QROPS Bahrain pension transfer for British expriates who want to retire in Bahrain or abroad?
• Avoids UK income tax
• Avoids UK dividends tax
• Avoids UK capital gains tax
• Avoids 55% tax upon death imposed in the UK when drawing a pension
• Has the ability to make higher returns with freedom of investment
• Protection: if anything happens to you, your nearest and dearest gets the entire pension pot
• Security: a secure jurisdiction such as the Isle of Man or Malta offers a high level of pension protection and a stringent financial regulatory framework.
What is a QROPS Bahrain?
A Qualifying Recognized Overseas Pension Scheme (QROPS Bahrain) allows your UK pension to be transferred offshore to reduce your tax burden. Effectively, you will no longer pay UK tax on your pension whilst you are offshore and after 10 years of living offshore, the reporting requirements to HMRC cease.
What is the economy of Bahrain like?
According to the 2011 Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal, Bahrain has the freest economy in the Middle East and North Africa region and is tenth overall in the world. An alternative index, published by the Fraser Institute, puts Bahrain in 44th place tied with 7 other countries. Though Current GDP per capita shrank by 2.4% in the 1980s, it bounced back to a growth of 36% in the 1990s as a result of successful diversification initiatives. Bahrain’s urgency in embracing economic liberalisation is due to its need to diversify the economy away from its limited oil supplies. Unlike its Persian Gulf neighbours, Bahrain has little oil wealth and the economy has expanded into banking, heavy industries, retail and tourism. The Kingdom is the main banking hub for the Persian Gulf and a centre for Islamic finance, which has been attracted by the strong regulatory framework for the industry.
Bahrain has benefited from the oil boom since 2001, with economic growth of 5.5%. It has succeeded in attracting investment from other Persian Gulf states partly because it used the revenues of the 1970s-early 80s boom to invest in infrastructure development and other projects to improve the standard of living; health, education, housing, electricity, water, and roads all received attention. Petroleum and natural gas, the only significant natural resources in Bahrain, dominate the economy and provide about 60% of budget revenues. Bahrain was the first Gulf state to discover crude oil, although reserves are estimated to run out in 10 -15 years. In Bahrain, petroleum production and processing account for about 60% of export receipts, 60% of government revenues, and 30% of GDP.
British expats come to Bahrain to work in oil and gas as well as to work in teaching positions. There is no personal income tax in Bahrain and workers get a high level of employment protection.
Employers and workers must pay social insurance contributions as follows:
(1) for old-age, disability and survivor protection: for Bahraini employees, employers pay 10% of salary plus constant allowances, workers pay 5% plus constant allowances; for non-Bahraini employees, employers pay 3% of salary plus constant allowances (then being entitled only to employment injury benefits).
(2) for unemployment insurance: since June 1, 2007, all wages are subject to a 2% tax, paid for equally by the employer and the employee, applicable both to nationals and non-citizens and supplemented by a government contribution of 1%. This makes Bahrain the first of the GCC countries to implement a UI scheme.
QROPS Bahrain. Are There QROPS Trustees in Bahrain
Do I need to move my pension to Bahrain?
There are no QROPS trustees in Bahrain. Your pension can be transferred to the Isle of Man or Malta where it will be out of the UK tax system.
Taxes on a QROPS in Bahrain?
Personal Income Tax in Bahrain
You will pay ZERO personal income tax in Bahrain. There will also be no tax at source on your income in Malta or the Isle of Man, although the Isle of Man imposes a 7.5% tax upon death whereas it is zero in the Isle of Man. The Isle of Man may offer a higher annual income though. In fact it may be 25% – 50% higher depending on your age and the prevailing yields on 15 year gilts at time of drawdown.
Do I need to live and retire in Bahrain?
No, you can retire anywhere outside of Bahrain and you would avoid UK taxation and your QROPS would grow free of charge, but the income taxes would depend on your residence at time of drawing your income.
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QROPS Bahrain article written by QROPS Specialists.QROPS Bahrain Pension Transfer for British Expats by Richard Malpass