QROPS

QROPS Colombia Pension Transfer for British Expats to Avoid Taxes


British expats living in Colombia or wishing to retire in Colombia can now transfer their pension into a QROPS Colombia to maximize pension tax relief. British expats living or working in Colombia can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like New Zealand or Gibraltar and will no longer have to pay UK taxes on their pension if they stay offshore.

In fact, even Colombians who have worked in the UK can transfer their UK private pensions offshore to avoid the 55% tax upon death whilst drawing benefits in the UK along with avoiding UK income taxes of up to 50%%

qrops colombia
QROPS Colombia Pension Transfer for UK Expats

Why live or retire in Colombia as a British expat?

More than 3,600 Brits live in Colombia. Colombia has the third largest population of any Spanish-speaking country in the world, after Mexico and Spain. Colombia is a standing middle power with the fourth largest economy in Latin America. Inequality and unequal distribution of wealth are widespread. In 1990, the ratio of income between the poorest and richest 10 per cent was 40-to-one. Following a decade of economic restructuring and a recession, this ratio had climbed to 80-to-one in the year 2000. By 2009, Colombia had reached a Gini coefficient of 0.587, which was the highest in Latin America. According to the Office of the United Nations High Commissioner for Human Rights, “there has been a decrease in the poverty rate in recent years, but around half of the population continues to live under the poverty line” as of 2008–2009. Official figures for 2009 indicate that about 46% of Colombians lived below the poverty line and some 17% in “extreme poverty”

Colombia is very ethnically diverse, and the interaction between descendants of the original native inhabitants, Spanish colonists, Africans brought as slaves and twentieth-century immigrants from Europe and the Middle East has produced a rich cultural heritage. Heritage which has contributed to making this country the richest in folk rhythms (with 165 reported) and various cultural events. This has also been influenced by Colombia’s varied geography. The majority of the urban centres are located in the highlands of the Andes mountains, but Colombian territory also encompasses Amazon rainforest, tropical grassland and both Caribbean and Pacific coastlines. Ecologically, Colombia is one of the world’s 17 megadiverse countries and is considered the most megadiverse per square kilometer.

Approximately 20% of the population is of European ancestry (predominantly Spanish, partly Italian, Portuguese, and German). The CIA World Factbook also states that 14% of Colombia’s total population is of mixed African and European ancestry, with 3% being of mixed African and Amerindian ancestry, and 4% having primarily African ancestry. Indigenous Amerindians comprise only 1% of the population. The nation is predominantly Roman Catholic.

Colombia’s cuisine, influenced heavily by the Spanish and Indigenous populations, is not as widely known as other Latin American cuisines such as Peruvian or Brazilian, but to the adventurous traveler there are plenty of delectable dishes to try, not to mention fruits, rum, and especially Colombian coffee. Football, baseball, F1 and golf are all popular, not to mention the vibrant music scene.

A QROPS Colombia pension transfer will help you move your pension offshore to avoid paying UK taxes on your pension.

The benefits of a QROPS Colombia

What are the benefits of a QROPS Colombia Pension Transfer for British expats in Colombia?

• Avoid UK income tax
• Avoid UK dividends tax
• Avoid UK capital gains tax (CGT)
• Avoid UK inheritance tax (IHT)

• 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 New Zealand or Gibraltar which would be outside the UK tax net, but they have their own strong financial regulations which are tax efficient

What is the economy like in Colombia?

In spite of the difficulties presented by serious internal armed conflict, Colombia’s market economy grew steadily in the latter part of the twentieth century, with gross domestic product (GDP) increasing at an average rate of over 4% per year between 1970 and 1998. The country suffered a recession in 1999 (the first full year of negative growth since the Great Depression), and the recovery from that recession was long and painful. However, in recent years growth has been impressive, reaching 8.2% in 2007, one of the highest rates of growth in Latin America. Meanwhile the Colombian stock exchange climbed from 1,000 points at its creation in July 2001 to over 7,300 points by November 2008.

According to International Monetary Fund estimates, in 2010 Colombia’s GDP (PPP) was US$429.866 billion (28th in the world and 3rd in South America). Adjusted for purchasing power parity, GDP per capita stands at $7,968, placing Colombia 82nd in the world. However, in practice this is relatively unevenly distributed among the population, and, in common with much of Latin America, Colombia scores poorly according to the Gini coefficient, with UN figures placing it 119th out of 126 countries. In 2003, the richest 20% of the population had a 62.7% share of income/consumption and the poorest 20% just 2.5%, and 17.8% of Colombians live on less than $2 a day. According to a recent World Bank report, doing business is easiest in Manizales, Ibagué and Pereira, and more difficult in Cali and Cartagena.

Which is the Best QROPS Jurisdiction for British Expats in Colombia?

New Zealand QROPS for British Expats in Colombia

  • Avoids UK income tax of 0% – 50% and 55% tax upon death in the UK
  • Avoids NZ taxation for British expats in Colombia
  • 100% of pension pot can be passed on as a lump sum upon death
  • 5 investment strategies based on your risk profile

Gibraltar QROPS for British Expats in Colombia

  • Avoids UK income tax of 0% – 50% and 55% tax upon death in the UK
  • Income tax is a flat rate of 2.5% at source in Gibraltar. Then you can remit to an offshore bank account or into a bank account in Colombia at which point you pay income tax in Colombia. This is suitable if you are not sure where you will retire.
  • 100% of pension pot can be passed on as a lump sum upon death
  • Much wider range of investments available. Can purchase most shares, ETFs, bond funds, hedge funds, etc.

What Tax Would I Pay on My QROPS in Colombia?

Colombian individuals residing in Colombia are subject to income tax (impuesto sobre la renta) on their worldwide income at progressive rates. Foreign individuals, i.e. British expats residing in Colombia are liable for income tax at the same progressive rates. However, during the first five years of residence, foreign individuals are taxed only on their Colombian-source income; from the sixth year of residence, they are taxed on worldwide income.

Nonresident individuals, whether Colombians or foreigners, are taxed only on Colombian-source income. For foreign nonresident taxpayers whose home country has not signed the New York Convention for the Protection of Migrant Workers, income tax is levied on net income at a flat rate of 33 percent. Net income is calculated by subtracting allowable deductions from total assessable income.

So, for British expats who spend most of the year living in Colombia (six months or more), you would only get taxed after the 5th year. It would be up to the individual to inform the Colombian tax authorities.

You can see the particulars of personal income tax in Colombia here.

Your QROPS pension can then be either paid into your Colombian bank account or an offshore account. It may also be beneficial to change your pension up into USD.

What is a QROPS Colombia?

A Qualifying Recognized Overseas Pension Scheme (QROPS Colombia) 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.

If you are living in Colombia at the moment, you can take advantage of your offshore address in order to transfer your UK pension into a QROPS Colombia to avoid further UK taxes down the line. A QROPS Colombia is the best vehicle to avoid UK taxes if you are considering living or retiring abroad.

What Happens to My QROPS if I Leave Colombia?

Do I need to move my pension to Colombia?

No. Your pension can be transferred to New Zealand or Gibraltar where it will be out of the UK tax system.

Do I need to live and retire in Colombia?

As long as you remain outside the UK, your QROPS will remain outside the UK tax net. If you return to live permanently in the UK, your pension returns to UK SIPP rules, except you would get time apportionment to reduce your tax burden.

QROPS Colombia article by QROPS Specialists.

QROPS Colombia Pension Transfer for British Expats to Avoid Taxes by