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QROPS Ireland Pension Transfers for British and Irish Expats


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

QROPS Ireland: 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 existing UK pensions into a QROPS in Hong Kong to reduce the tax on their retirement income. 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 Recognized Overseas Pension Scheme (ROPS, formerly QROPS). The ROPS market has been strengthened following new ROPS 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 Ireland itself and for tax efficiency reasons, it often needs to be transferred to a 3rd jurisdiction.

In fact, if you are living in Ireland or moving to Ireland from the UK, we currently suggest looking into moving your pension to Hong Kong. HK has a Double Taxation Treaty with Ireland that gives the taxation rights to Hong Kong. Your ROPS would grow tax-free with no tax on death or income in HK. Ireland won’t tax the income under current rules, as the taxation rights are given to HK, who tax the pension at zero rate. Your pension can then be paid into your Irish bank account tax-free. Please also seek local tax attorney advice.

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 in the UK, especially if you have a final salary pension scheme. 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 existing UK pensions offshore to somewhere secure like Hong Kong and will no longer have to pay UK taxes on their pension as long as they remain tax resident outside the UK. Many advisers are recommending transferring  a UK pension to a ROPS in Ireland or to Malta, but both would face income tax in Ireland. There are some restriction on a HK pension: only 25% tax-free lump sum is allowed and the rest must pay you an income for life, but the tax advantageous often outweigh the need for access, especially as due to better healthcare, a pension often needs to last you 30  years or longer and may need to be used to pay for care in old age.

Irish expats who have worked in the UK, can move their existing UK pensions offshore to somewhere secure like Hong Kong and will no longer have to pay UK taxes on their ROPS pension as long as they remain tax resident outside the UK.

Irish expats can move their existing Irish pensions 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 / ROPS in Malta, but would still pay Irish income tax on their pension scheme within the ROPS.

Irish pension transfers: Irish citizens can avoid the Irish pension levy with a transfer of an Irish pension to a ROPS, but would pay Irish income taxes on remittance if they move to a ROPS in Malta or Ireland. 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 ROPS. Therefore, we 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 / ROPS and the Double Taxation Treaties.

qrops ireland

If you are a British expat in Ireland and want to avoid up to 45% tax upon death whilst drawing a pension income after 75 and UK income taxes of up to 45% that the UK government imposes, you should consider moving your pension to a ROPS in Malta or Hong Kong. We will now explore these options and detail the individual characteristics of each QROPS jurisdiction to help you make an informed 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 ROPS 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. Recently, the cautious portfolio has achieved the best annualized return so far. However, these strategies have only been running for less than five years. You can take only a 25% tax-free lump sum at age 55, unless you have been living offshore for 10 years, in which case you can take 30%. The rest must provide you with an income for life.

Irish expatriates living around the world can also move their existing UK pensions to a QROPS in New Zealand to avoid UK taxataion . Their QROPS would be paid out gross and income tax would depend on the country you retired to.

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

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 ROPS 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 report to HMRC for compliance. An investment portfolio is then set up where you can purchase a wide range of investments such as investing in 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 you can keep your pension in GBP. Obviously, your pension performance will depend on the performance of the investment portfolio.Please speak to QROPS Specialists about goal setting and risk tolerance.

Malta now allows full flexible drawdown, similar to the UK, so you can access your entire pension if you like after age 55, but you would pay Irish income tax on any retirement income you draw due to the Malta-Irish Tax Treaty.

An Irish expat transferring an Irish pension abroad would avoid the Irish pension levy, Irish income taxes as well as any Irish tax on death and would pay the relevant taxes in the country they reside in. For example if an Irish expat is living in Spain, the Irish expatriate would avoid Irish taxes altogether, but would pay Spanish income tax on their ROPS. This is because Spain has a Double Taxation Agreement with Malta meaning the pension would be paid out gross in Malta, but taxed on income in Spain. 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 keeping their pension in Ireland or finding a low cost ROPS solution in another territory like Gibraltar.

QROPS Ireland | UK Pension Transfers to Hong Kong for British Expats in Ireland

British expats in Ireland can move their pension to a QROPS in Hong Kong to avoid UK taxation and Irish taxation. Their pension is transferred to the ROPS trustees in Hong Kong who administer the pension. They do the actuarial work and figure out how much pension you should be paid as well as report to HMRC for the next 10 years.

Thanks to the Hong Kong – Irish Double Taxation Agreement, there is no tax in Ireland on HK ROPS retirement income.

Hong Kong – Ireland DTA

Article 17

Pensions

1. Pensions and other similar remuneration (including a lump sum payment) paid to a resident of a Contracting Party in consideration of past employment or self-employment under a pension or retirement scheme or fund which is:
(a) a public scheme which is part of the social security system of a Contracting Party; or
(b) a scheme or fund to secure retirement benefits which is recognised for tax purposes in a  Contracting Party,
shall be taxable only in the Contracting Party referred to in subparagraph (a) or (b) hereof.
2. Pensions and other similar remuneration (including a lump sum payment),other than those referred to in paragraph 1, paid to a resident of a Contracting Party in consideration of past employment shall be taxable only in that Party.
3. This Article is subject to the provisions of paragraph 2 of Article 18.

In other words, the HK DTA gives the taxation rights to Hong Kong not Ireland, so your pension can only be taxed in Hong Kong.

Once the HK ROPS is set up, the pension pot is then invested: 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 or keep in GBP. Obviously, your pension performance will depend on the performance of the investment portfolio. We set up portfolios based on your investment goals and risk tolerance.

Hong Kong is the most tax advantageous ROPS solution for British expats who become tax resident in Ireland.

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 up to 45% tax upon death whilst in drawdown
  • Avoids UK income taxes of up to 45%
  • 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.
  • 25% tax-free lump sum at age 55; rest to provide an income for life
  • 30% tax-free lump sum at age 55 only if you have lived overseas for more than 10 years
  • Pension income is determined by 120% GAD rates on drawdown

Malta QROPS for British Expatriates in Ireland

  • Avoids up to 45% tax upon death after age 75 whilst in drawdown
  • Avoids UK income taxes of up to 45%
  • 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
  • Full flexible drawdown, access as much pension as you like after age 55, howver there would be some exit fees if cashing in immediately

Hong Kong QROPS for British Expatriates in Ireland

  • Avoids up to 45% tax upon death after age 75 whilst in drawdown
  • Avoids UK income taxes of up to 45%
  • Avoids income tax in Ireland as taxation rights given to Hong Kong
  • So, no taxed on income, growth or death as long as you remain tax resident in Ireland under current rules
  • 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. ROPS avoids the Irish pension levy and Irish taxation. However, Irish pension rules normally mean you have to work in the country you move your pension to. Please contact us for the latest tax rules.

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 income tax of 2.5%, but avoids death taxes or keeping their pension in Ireland.

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 in the Isle of Man.

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. 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 an Irish pension 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. However, recent Irish rules have stopped many of these transfers, please contact us for the latest information.

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) or a ROPS or simply OPS (Overseas Pension 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. This is a very important distinction.

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.

QROPS Ireland Pension Transfers for British and Irish Expats by

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