QROPS Egypt. Pension Tax Relief for British Expats in Egypt
British expats living in Egypt or planning to retire in Egypt can now transfer their pension into a QROPS Egypt to reduce their tax burden. British expats living or working in Egypt can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like the Malta and will no longer have to pay UK taxes on their pension if they stay offshore. This means avoiding 55% tax upon death as well as up to 45% in income taxes. You can move your pension to a secure destination such as Malta or New Zealand to avoid UK taxes. Malta has a double taxation agreement with Egypt.
Even Egyptians who have worked in the UK can transfer their pensions offshore to avoid UK taxes on their pension.
Egypt has a population of about 80 million. The economy of Egypt is one of the most diversified in the Middle East, with sectors such as tourism, agriculture, industry and service at almost equal production levels.
In early 2011, Egypt underwent a revolution, which resulted in the ousting of President Hosni Mubarak after nearly 30 years in power.
Why live and retire in Egypt as a British expat?
About 14,000 Brits live in Egypt. Egyptian culture has six thousand years of recorded history. Ancient Egypt was among the earliest civilizations and for millennia, Egypt maintained a strikingly complex and stable culture that influenced later cultures of Europe, the Middle East and other African countries. After the Pharaonic era, Egypt itself came under the influence of Hellenism, Christianity, and Islamic culture. Today, many aspects of Egypt’s ancient culture exist in interaction with newer elements, including the influence of modern Western culture, itself with roots in ancient Egypt.
Egyptian cuisine’s history goes back to Ancient Egypt. Archaeological excavations have found that workers on the Great Pyramids of Giza were paid in bread, beer, and onions, apparently their customary diet as peasants in the Egyptian countryside. Egyptian cuisine is notably conducive to vegetarian diets, as it relies heavily on vegetable dishes. Though food in Alexandria and the coasts of Egypt tends to use a great deal of fish and other seafood, for the most part Egyptian cuisine is based on foods that grow out of the ground. Meat has been very expensive for most Egyptians throughout history, and a great deal of vegetarian dishes have developed to work around this economic reality.
Why Transfer Your Pension to a QROPS Egypt
What are the benefits of a QROPS pension Transfer for British expats in Egypt?
• Avoid UK income tax of up to 45%
• Avoid UK dividends tax
• Avoid UK capital gains tax (CGT)
• Avoid 55% tax upon death in the UK when you come to drawing your pension
• 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 Malta which has its own strong financial regulations which are tax efficient
What is the Egyptian economy like?
Egypt has a stable economy in the Middle East and North Africa enjoying continuous growth, averaging 4%–5% in the past quarter-century. Gross domestic product (GDP) per capita based on purchasing-power-parity (PPP) increased fourfold between 1981 and 2006, from US$ 1355 in 1981 to an estimated US$ 4535 in 2006.
Egypt’s trade balance marked US$10.36 billion in FY2005 compared to US$7.5 billion. Egypt’s main exports consist of natural gas, and non-petroleum products such as ready-made clothes, cotton textiles, medical and petrochemical products, citrus fruits, rice and dried onion, and more recently cement, steel, and ceramics. Egypt’s main imports consist of pharmaceuticals and non-petroleum products such as wheat, maize, cars and car spare parts.
Italy and the USA are the top export markets for Egyptian goods and services. In the Arab world, Egypt has the largest non-oil GDP as of 2005. The exchange rate has been linked to the US dollar since the 1950s. Several regimes were adopted including initially the conventional peg in the sixties, regular crawling peg in the seventies and the eighties and crawling bands in the nineties. Over that time period, there were several exchange rate markets including black market, parallel market and the official market. With the turn of the new millennium, Egypt introduced a managed float regime and successfully unified the Pound exchange rate vis-à-vis foreign currencies.
What is a QROPS Egypt?
A Qualifying Recognized Overseas Pension Scheme (QROPS Egypt) 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. You don’t have to worry about these reporting requirements as the QROPS trustees will do this for you.
If you are living in Egypt 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.
What is the Best Country to Transfer My QROPS to for a British Expat in Egypt?
Malta has a double taxation agreement with Egypt meaning that your pension will be paid out tax free. You will avoid all taxes in the UK and Malta. This is likely the optimal QROPS option as you will have a wide range of financial products which you will be able to purchase. Once your pension is transferred into cash, it is then reinvested in a portfolio. You can buy mutual funds, gilts, treasuries, bonds, shares and ETF’s. You can also purchase property funds. If you are very conservative, you could just park your pension in cash.
If you have a smaller pension, we can transfer to New Zealand. The investment options are much less in NZ, but like Malta, avoids taxation. A NZ QROPS is much cheaper than a Malta QROPS because of the more limited options. The return may be less from a NZ QROPS as the investment strategy is more conservative.
What Taxes Will I Pay on My QROPS in Egypt?
If you have a NZ QROPS or a Malta QROPS, you will avoid all taxation in the UK and those countries. But, you may pay taxes on your income in Egypt. Typically a 10% income tax is applied on income coming from outside Egypt if you are non-resident, i.e. you are living in Egypt for less than 183 days per year.
For British expats resident in Egypt 183 days or longer, the taxes are as follows:
From EGP Percent
1 – 5,000 0%
5,001 – 20,000 10%
20,001 – 40,000 15%
You can get more info on allowance and income tax rates in Egpyt here.
Do I need to move my pension to Egypt?
No. There are no QROPS trustees in Egypt for personal pensions. Your pension can be transferred to a secure jurisdiction such as Malta or New Zealand where it will be out of the UK tax system and your pension will be paid gross and grow tax free.
What happens to my QROPS if I leave Egypt to retire elsewhere?
As long as you are outside the UK, your QROPS will grow free of UK tax. The income tax will depend on the country you retire to. If you ever return to live permanently in the UK, your pension will simply return to UK Self Invested Pension Plan (SIPP) rules, plus you will get time apportionment relief, so will likely pay little or no tax upon death.
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QROPS Egypt article written by QROPS Specialists.