QROPS Ireland Pension Transfers for British and Irish Expats

Pension Tax Relief for British Expats in Ireland, Irish Residents and Irish Expats Abroad

British expats in Ireland or British expatriates who want to retire in Ireland as well as Irish residents and Irish expats can now transfer their pension into a QROPS Ireland to maximize pension tax relief. There are over 300,000 British expats living in Ireland, many of whom have no idea that they can reduce their tax burden with a move to a Qualifying Recognized Overseas Pension Scheme. The QROPS market has been strengthened following new QROPS rules which have been applied by HMRC. When dealing with QROPS Ireland, The first thing to realize is that your pension does not have to be transferred to the jurisdiction in which you live and for tax efficiency reasons, it often needs to be transferred to a 3rd jurisdiction.

Now, when considering where to transfer your pension for maximum tax efficiency, best pension income drawdown and best investment strategies, the Double Taxation Agreements (DTA’s) between the country you live in and the QROPS jurisdiction needs to be examined in detail. It is therefore crucial to contact QROPS Specialists to find the best solution. In fact, under some circumstances it may even be better to leave your pension where it is. A suitability report needs to be prepared by QROPS Specialists to determine the best course of action.

British expats living in Ireland can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like the Isle of Man, Malta or New Zealand and will no longer have to pay UK taxes on their pension if they stay offshore.

Irish expats can move their pension offshore to avoid the new levy on Irish pensions which was announced in May 2011 as well as other Irish taxation. The new levy will start at 0.6% p.a. The new pension levy will amount to an average of 7.5% on their pension pot. The contribution will be made up of 3% on the first €15,000 of pay, 6% on the next €5,000 and a 10% levy on the remainder of earnings. Irish expatriates and Irish residents can now avoid this tax by a transfer to a QROPS.

Irish citizens can avoid the Irish pension levy with a transfer to a QROPS, but would pay Irish income taxes on remittance. However, we are increasingly seeing these transfers blocked by the Irish scheme administrators following negative guidance issued by the Irish Revenue, particularly where the client is not resident in the same jurisdiction as the QROPS. We therefore look at them on a case by case basis as feasibility can vary according to the type of Irish pension scheme the member is in and the jurisdiction of the receiving QROPS. On occasion it is easier to route transfers through a UK SIPP initially with a later transfer to a QROPS, although this is also subject to increased scrutiny now. A transfer must take place for reasons related to your pension and not just for tax avoidance.

qrops ireland

QROPS Ireland Pension Transfer

If you are a British expat in Ireland and want to avoid the 55% tax upon death whilst drawing a pension income and UK income taxes of up to 50% that the UK government imposes, you are better off moving your pension to Malta, the Isle of Man or New Zealand. We will now explore these options and detail the individual characteristics of each QROPS jurisdiction, so you can make the right choice when establishing a QROPS in Ireland.

QROPS Ireland. UK Pension Transfers to New Zealand for British Expats in Ireland

British expats in Ireland can move their pension to a QROPS in New Zealand to avoid UK taxation. Their pension is transferred to the trustees in New Zealand who administer the pension. The fund is then invested in GBP and usually run by a discretionary fund manager who offers five strategies: cautious, conservative, balanced, progressive or adventurous investment portfolios. These have typically returned between 4.5% and 5.5% p.a. depending on the strategy chosen. Curiously, the cautious portfolio has achieved the best annualized return so far. However, these strategies have only been running for the last 3 years. In drawdown, you can take 120% of UK GAD rates.

Irish expatriates can also move their pension to a QROPS in New Zealand to avoid Irish taxation. Their QROPS would be paid out gross and income tax would depend on the country they live in.

Please note that if the Irish expat lives in New Zealand, there would be further taxes to pay. Click here for more.

QROPS Ireland. UK Pension Transfers to Malta for British Expats in Ireland

British expats in Ireland can move their pension to a QROPS in Malta to avoid UK taxation. Their pension is transferred to the trustees in Malta who administer the pension. They do the actuarial work and figure out how much pension you should be paid as well as doing HMRC compliance. Once they have taken their set up and annual fees the rest is normally invested in the Isle of Man. An investment portfolio is then set up where you can purchase a wide range of investments such as the purchase of individual shares, mutual funds, bond funds, hedge funds and ETF’s from most of the world’s major exchanges such as the S&P500, FTSE100 or EUROSTOXX 50.

You can choose to have your pension transferred to EUR or stay in GBP. Obviously, your pension performance will depend on the performance of the investment portfolio. Our standard retirement portfolio includes some investments which have little to no correlation to market conditions and the target return is at least 7% p.a. We can tailor your portfolio to suit your needs.

The pension income in drawdown would be 120% of GAD rates. You can also get programmed withdrawals which is normally 50% of any increase in the value of the fund every 3 years.

An Irish expat would avoid the Irish pension levy and would pay the relevant taxes in the country they reside in. For example if a member is in Spain, the Irish expatriate would avoid Irish taxes altogether, but would pay Spanish income tax on their QROPS. This is because Spain has a Double Taxation Agreement with Malta meaning the pension would be paid out gross. If the country the Irish expatriate lives in does not have a DTA with Malta, then they would pay Maltese income taxes of between 15% and 35%. In which case, they may be better off setting up a QROPS in Gibraltar which just has a flat rate tax of 2.5%. If a British expats lives in Malta, there is a flat rate tax of 15%.

QROPS Ireland. UK Pension Transfers to the Isle of Man for British Expats in Ireland

British expats in Ireland can move their pension to a QROPS in the Isle of Man to avoid UK taxation. Their pension is transferred to the trustees in the Isle of Man who administer the pension. They do the actuarial work and figure out how much pension you should be paid as well as reporting to HMRC for the next 10 years. Once the Isle of Man trustees have taken their set up and annual fees the rest is normally invested into an investment portfolio in the Isle of Man. The portfolio can purchase a wide range of investments such as the purchase of individual shares, mutual funds, bond funds, hedge funds and ETF’s from most of the world’s major exchanges such as the S&P500, FTSE100 or EUROSTOXX 50.

You can choose the currency your pension is denominated in, so you could transfer to EUR if preferred. Obviously, your pension performance will depend on the performance of the investment portfolio. Our standard retirement portfolio includes some investments which have little to no correlation to market conditions and the target return is at least 7% p.a. after charges. We can tailor your portfolio to suit your needs.

One of the major advantages of an Isle of Man QROPS is that you can get an increased pension drawdown as your pension income is not based on UK GAD rates. For example, a 65 year old male with a £100,000 pension pot would receive a pension income of £6,600 under a Malta QROPS or New Zealand QROPS (assuming the current 120% of GAD rate with a 2.25% yield) whereas he would receive £8,230 under an Isle of Man scheme (assuming a 6% growth of the pension pot).

So, for those with large pensions where income drawdown may be a more pressing issue than tax, an Isle of Man QROPS may be a better fit. In the example here, the Isle of Man pays out a 25% higher pension income. British expatriates in Ireland who hold an Isle of Man QROPS would only pay Irish income taxes and would avoid UK taxation and Isle of Man income taxes, although they would be subject to a 7.5% income tax upon death from the Isle of Man.

QROPS Ireland Benefits. Summary of QROPS Options

What are the QROPS Ireland Benefits for British expats in Ireland and Irish expats?

New Zealand QROPS for British Expatriates in Ireland

  • Avoids 55% tax upon death whilst in drawdown
  • Avoids UK income taxes of up to 50%
  • Avoids taxation in New Zealand
  • No tax upon death. The entire pension pot is passed on as a lump sum to whoever you choose
  • Invests in GBP in a discretionary managed portfolio with 5 strategies to choose from: cautious, conservative, balanced, progressive and adventurous. Annualized return is approx. 5% p.a.
  • Pension income is paid out gross and Irish income tax is paid on receipt of income in Ireland.
  • Pension income is determined by 120% GAD rates on drawdown

Malta QROPS for British Expatriates in Ireland

  • Avoids 55% tax upon death whilst in drawdown
  • Avoids UK income taxes of up to 50%
  • Avoids taxation in Malta
  • Invests in a wide range of investments. You can choose your currency, GBP, USD, EUR, Singapore Dollars, etc.
  • Irish income taxes upon receipt of pension income in Ireland
  • 120% GAD rates on drawdown

Isle of Man QROPS for British Expatriates in Ireland

  • Avoids 55% tax upon death whilst in drawdown
  • Avoids UK income taxes of up to 50%
  • Avoids income tax in the Isle of Man
  • 7.5% tax charge in the Isle of Man upon death
  • Invests in a wide range of investments. You can choose your currency, GBP, USD, EUR, Singapore Dollars, etc.
  • Irish income taxes are applied upon receipt of pension income
  • Higher pension income than 120% GAD rates available. This can be a significantly higher income rather than the rates that GAD allows currently due to low yields on UK gilts.

QROPS Ireland. Irish Pension Transfers for Irish Expats

Irish expats can transfer their pensions to Malta, New Zealand, the Isle of Man or Gibraltar. The best fit would depend on the Double Taxation Agreements between the country that the Irish expatriate lives in and the QROPS jurisdiction. They would avoid the Irish pension levy and Irish taxation.

An Irish expat would avoid the Irish pension levy and would pay the relevant taxes in the country they live in. For example if an Irish expat lives in Spain and transfers to a Malta QROPS, the Irish expatriate would avoid Irish taxes altogether, but would pay Spanish income tax on their QROPS. This is because Spain has a Double Taxation Agreement with Malta meaning the pension would be paid out gross. If the country the Irish expatriate lives in does not have a DTA with Malta, then they would pay Maltese income taxes of between 15% and 35%. In which case, they may be better off setting up a QROPS in Gibraltar which just has a flat rate tax of 2.5%.

For Irish expats that move to the Isle of Man, if there is a Double Taxation Agreement between Ireland and the country the Irish expat lives in, then the expat would pay 0% tax in Ireland, 0% income tax in the Isle of Man, but pays income tax in the country they live in. They would pay a 7.5% tax upon death.

If the country the Irish expatriate lives in does not have a DTA with the Isle of Man, the Isle of Man would tax the income at 20% in the Isle of Man. However, that 20% income tax already paid in the Isle of Man may be used as a credit under unilateral tax relief (except if they reside in France, HK or UAE).

For Irish expats that live in a country that does not have a Double Taxation agreement with NZ, IOM or Malta then a Gibraltar QROPS may be preferable. In which case, the pension is taxed at a flat rate of income tax of 2.5% at source in Gibraltar and the pension monies are invested in the Isle of Man. They avoid any taxes upon death. Any income tax they pay would depend on the income tax rules of the country they live in. Many Caribbean and Arab countries for instance have zero income tax.

QROPS Ireland. Irish Pension Transfers to QROPS for Irish Citizens Who Will Retire in Ireland

An Irish expat can transfer to a QROPS in the Isle of Man and avoid the Irish pension levy (subject to approval from their existing pension scheme), but the QROPS would be taxed on remittance to Ireland. In this case, a transfer to New Zealand, Malta or the Isle of Man would be suitable as all have DTAs with Ireland. Malta may be a good option as it avoids all taxation in Malta and has a wide range of investments you can look at. However, for larger pensions who want an income, the Isle of Man may be preferable. This avoids Isle of Man income taxes, but has a 7.5% income tax upon death.

Both Malta and the Isle of Man have a much wider range of investments available in a variety of currencies, whereas the NZ QROPS would be invested in GBP with a narrow range of strategies available, although it would be discretionary managed.

However, the Irish Revenue don’t allow a transfer to a ‘QROPS’ per se as the term only exists in UK law and not in Irish law. They may allow transfers to a foreign scheme which happens to be a QROPS under the UK definition but they wouldn’t have the first clue what you were talking about if you specifically mentioned “QROPS”. It may also be referred to as an EURBS (European Union Retirement Benefits Scheme).

Regardless, the overriding concern would be that ANY transfer must be done ‘for pension reasons and not tax reasons’. This means that a transfer to a QROPS (Qualifying Recognized Overseas Pension Scheme) would need to be for pension purposes not simple to avoid taxation. So, it is really intended for Irish citizens who intend to retire abroad rather than a tax avoidance tool for those Irish citizens who will live and retire in Ireland.

What are the Fees for a Pension Transfer to a QROPS?

The fees vary dependent on the QROPS jurisdiction you use, the trustees you use, the investment portfolio you choose, the size of your pension and the investments you choose.

We have extensive experience navigating these QROPS waters and can find the correct pension scheme to suit your pension with the lowest fees.

Please contact us for advice on QROPS Ireland. Send enquiries to info@qropsspecialists.com

QROPS Ireland Pension Transfers for British and Irish Expats by

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About Richard Malpass

Richard Malpass is a financial advisor from the UK who has been in Thailand for 14 years and helps British expats with fiduciary advice. He works for Credenda Associates in Bangkok. He covers Thailand, Vietnam, Laos, Cambodia and the Asian region by air and covers the rest of the world via post, telephone and internet.

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