QROPS Jordan. Pension Tax Relief for British Expats in Jordan
British expats living in Iran or planning to retire in Iran can now transfer their pension into a QROPS Iran to maximize pension tax relief. British expats living or working in Jordan can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like Malta or Gibraltar and will no longer have to pay UK taxes on their pension as long as they stay offshore.
Furthermore, Any Jordanian nationals who have worked in the UK and built up a significant pension can also look to a QROPS Jordan to avoid UK taxes on any pensions they hold.
Why would you live and retire in Jordan as a British expat?
About 7,200 Brits are estimated to live in Jordan. Modern Jordan is predominantly urbanized. Jordan is classified as a country of “high human development” by the 2010 Human Development Report. Furthermore, The Kingdom has been classified as an emerging market with a free market economy by the CIA World Fact Book. The Free Trade Agreement (FTA) with the United States went into effect in December, 2001 phased out duties on nearly all goods and services between the two countries.
On the other hand, Jordan enjoyed “advanced status” with the European Union since December, 2010 as well as being a member of the Euro-Mediterranean free trade area. Jordan has more Free Trade Agreements than any other country in the region. It has a moderate “pro-Western” policy with very close relations with the United States and the United Kingdom, and became a major non-NATO ally of the United States in 1996. Yet, Jordan is a founding member of both the Arab League and the Organization of the Islamic Cooperation (OIC).
Jordan has a very diverse cultural scene with many different artists, religious sects, and ethnic groups residing in the small country because of Jordan’s reputation for stability and tolerance. Jordan has been an established medical tourism destination in the Middle East since the 1970s. A study conducted by Jordan’s Private Hospitals Association (PHA) found that 210,100 patients from 48 countries received treatment in the kingdom in 2008, compared to 190,000 in 2007, bringing over $1 billion in revenue.
What taxes would I pay on my QROPS Jordan pension transfer as a British expat living in Jordan?
The tax year in Jordan runs from January to December although this is flexible for individual taxpayers and may depend when they were first registered to pay tax in the country. Both residents and non-residents will only pay taxes on the money that they earn in Jordan, which helps to make the country an attractive prospect to those who wish to retire, as the pensions they earn in their home country are not subject to Jordanian taxes.
What is the Tax on My QROPS if I Live in Jordan?
So, a QROPS Jordan allows your pension to grow tax free in a secure country such as Malta, NZ or Gibraltar where it is out of the UK tax net and is paid gross with no taxes deducted. This can then be paid to an offshore account in the Isle of Man, for example, or remitted to a Jordanian Bank which will also be tax free.
If you are living or working in Jordan at the moment, you can take advantage of your offshore address and transfer your pesnion to a QROPS Jordan in a secure jurisdiction such as the Gibraltar or Malta to mitigate UK taxes.
Income tax in Gibraltar would be flat rate of 2.5%. Your pension would be taxed at source. This would be the only tax if you took your pension income in Jordan. If you retired elsewhere, your tax would likely be the local income tax rate.
Benefits of a QROPS Jordan
What are the benefits of a QROPS Pension Transfer for British expats living in Jordan?
• 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 Gibraltar which is under the protection of the British Crown, but has its own strong financial regulations which are tax efficient
What is QROPS Jordan?
A Qualifying Recognized Overseas Pension Scheme (QROPS Jordan) 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 Jordan at the moment, you can take advantage of your offshore address in order to move your UK pension into a QROPS Jordan to avoid further UK taxes down the line. A QROPS Jordan is the perfect vehicle to avoid UK taxes if you are considering living or retiring abroad.
What is the economy like in Jordan?
Jordan is a small country with limited natural resources. The country is currently exploring ways to expand its limited water supply and use its existing water resources more efficiently, including through the good regional cooperation it has with Israel. The country depends on external sources for the majority of its energy requirements. During the 1990s, its crude petroleum needs were met through imports from Iraq and neighboring countries.
Since early 2003, oil has been provided by some Gulf Cooperation Council member countries. In addition, the Arab Gas Pipeline from Egypt to the southern port city of Aqaba was completed in 2003. The government plans to extend this pipeline north to the Amman area and beyond. Jordan grew 7.6% during the global financial crisis and has been steady since. The GDP outlook for 2011 is 3.3%. GDP per capita by PPP is $5,759 International Dollars. The economy is divided up by agriculture: 3.5%, industry: 29.9% and services: 66.5%.
If I work in Jordan, what are the taxes in Jordan for a British expat?
The tax year in Jordan runs from January to December although this is flexible for individual taxpayers and may depend when they were first registered to pay tax in the country. Both residents and non-residents will only pay taxes on the money that they earn in Jordan, which helps to make the country an attractive prospect to those who wish to retire, as the pensions they earn in their home country are not subject to Jordanian taxes. A resident is classed as an individual that spends more than 183 days in the country during the tax year.
There are a number of tax treaties in place that ensures that expats in Jordan are not charged for their Jordanian income in their home country too. A worker who spends time in the country working for a non-Jordanian company may also find that they can work without having their salary taxed.
The employer will be able to advise further on this but if you are ensure of your employer’s status in Jordan you can check with the local tax office.
Capital gains are not taxed in Jordan, and the income is classed only as personal income and taxed at the standard rate. A property tax is payable.
This is 14% of the estimated annual rental value of the property, and it is applied whether or not the property is lived in by the tenant or the owner. There are no inheritance taxes or wealth taxes applied, which means that Jordan is becoming increasingly popular with wealthier people. Dividends from shares are not taxed as long as the company withholds the tax before the payment is made to the individual.
Royalties and other fees are taxable at 10% and Jordan does have a gift tax which is taxable at the same rate. An individual can earn 12,000 Jordanian Dinars before they have to pay tax and those with a family can earn twice that amount. Tax rates range from 7% to 14% depending upon the level of salary earned.
There is a PAYE system, where the employer will deduct tax and social security contributions and make those payments on the worker’s behalf. Self employed workers will need to submit a tax return to the Income Tax and Sales Tax Department. Standard VAT is 16%.
Should I Move My UK Pension to a QROPS in Jordan?
Do I need to move my pension to Jordan?
No. Jordan does not have a QROPS. If you are a British expat or have ever worked in the UK, your pension can be transferred to a jurisdiction such as Gibraltar where it can grow without having to pay any UK taxes. Your pension can then be paid into your local bank account or an offshore bank.
Do I need to live and retire in Jordan?
No. But, you need to have an offshore address in order to move your pension abroad. You can then live or retire anywhere outside the UK. If you ever move back to the UK, your pension will revert to typical UK SIPP rules. If you retire elsewhere, you would pay the local income taxed in that country.
For enquiries, please send email to firstname.lastname@example.org
Pension tax relief for UK expats, QROPS Jordan article written by QROPS Specialists.QROPS Jordan Pension Transfer for British Expats to Avoid Paying Taxes by Richard Malpass