QROPS Jurisdictions

QROPS Jurisdictions Overview

Qualifying Recognized Overseas Pension Schemes (QROPS) are not located in every country and for British expats who want tax optimisation and the best investment outcome, they must take care when choosing the correct QROPS jurisdiction to park their pension. Frequently, their UK pension is transferred to a tax efficient QROPS jurisdiction such as Malta, Hong Kong or New Zealand whilst they retire in a country such as Portugal or Dubai. QROPS pension income and retirement benefits can be paid directly into your local bank of choice abroad.

For example, if you live in Egypt, there are no QROPS jurisdictions there and for economic security, you may not want your pension transferred to Egypt anyway. You would be better off transferring your pension to a tax neutral country such as New Zealand for example, which is a regulated, secure OECD country and your retirement benefits from your pension would just be paid directly into an offshore or Egyptian bank account of your choice at your retirement age of 55 or later.

In this article, we will do a quick QROPS jurisdiction review with links to more in-depth articles to the various QROPS jurisdictions.

How to Choose the Best QROPS Jurisdiction


Choose your QROPS jurisdiction / QROPS destination
below. We have listed the countries where you may retire and the Double Taxation Agreements with the QROPS jurisdictions in question.

There are many others, such as Australian QROPS which now allow UK pension transfers if you are over 55, but the main third country QROPS jurisdictions / destinations for UK pension transfers are: the Isle of Man, Gibraltar, Hong Kong and New Zealand.

QROPS Awards

QROPS Jurisdictions

We are now going to give QROPS “awards” to the various jurisdictions which may help give you some insight into best QROPS choices.

Best QROPS Jurisdiction for Inheritance Planning – NZ QROPS (no max age to take benefits)
Best QROPS for Pension Security – NZ QROPS followed by the Isle of Man
Best QROPS for Maximum Pension Drawdown – Malta QROPS
Best QROPS for Europe – Malta QROPS (but need to check the DTA’s)
Best QROPS for the USA and Canada – Malta QROPS (but you need to be careful with the investment choices)
Best QROPS for Asia – Hong Kong and New Zealand QROPS
Best QROPS for Maximum Investment Options – Malta and Gibraltar QROPS

You can see that each case is unique, please contact us for a pension transfer review.

QROPS Jurisdiction Comparison

We now compare the various QROPS jurisidctions. The table below shows a a comparison between the different retirement benefits and taxation in the various QROPS jurisdictions.

Malta QROPS Vs. Gibraltar QROPS Vs. New Zealand QROPS Vs. IOM QROPS

Pension Rules Malta Gibraltar New Zealand Isle of Man
Current Pension Income Permitted Flexible Drawdown Available (Similar to UK) 150% GAD within 5 years of non-UK residency. Higher levels of income may be allowed after 5 years of residency at trustee’s discretion 150% GAD within 5 years of non-UK residency. Actuarial basis after 5 years of non UK residency 150% GAD within 5 years of non-UK residency. Actuarial basis after 5 years of non UK residency
Proposed Pension Income Permitted Flexible Drawdown Available (Similar to UK) Gibraltar changed income tax rules in 2014 to allow more than 30% commutation – still awaiting clarification from HMRC (April 2016) NZ Providers have confirmed that they will amend their documents to remove all references to 70% income for life – awaiting clarification from HMRC (April 2016) Isle of Man authorities are not expected to introduce full flexibility in the short term.
Income Tax Treatment in Your Country of Residence No income tax if DTA with your country of residence allows it otherwise up to 35% A withholding income tax of 2.5% is applied at source plus your local income tax No income tax in New Zealand No income tax if DTA with country of residence allows it otherwise up to 20% income tax
Tax-Free Lump Sum (PCLS) 30% of fund value after 5 years of non–UK residency 30% fund value after 5 years of non–UK residency 30% of tax relieved funds plus 100% of any investment growth 30% fund value after 5 years of non–UK residency
Death Tax 0% 0% 0% 7.5%
Early Retirement Age 55 55 55 unless member has ill health 55
Maximum Age for Taking Pension Benefits 75 75 No Maximum 75
Investment Options Open architecture subject to trustees’approval Open architecture Pooled Funds Open architecture
Moody’s Country Credit Rating A3 N/A Aaa Aa1
EU Member Yes Yes by virtue of being UK territory No No
EEA Participant Yes Yes No Yes
Dedicated Pension Regulator Yes Yes Yes Yes
Tax Authority Malta Inland Revenue Gibraltar Income Tax Office New Zealand Inland Revenue Income Tax Division of Isle of Man Treasury
Financial Services Regulator Malta Financial Services Authority Gibraltar Financial Services Commission New Zealand Financial Markets Authority Isle of Man Financial Services Authority
Compensation scheme Yes but pensions excluded Yes but pensions excluded Yes Cash in pensions / policyholder protection on life contracts
Ombudsman No No Yes Yes
Double Tax Agreements 65* 0 however Gibraltar has 27 Tax Information Exchange Agreements (TIEA) signed (correct at 1 July 2015) 39* 23*

* correct at August 2016

QROPS Isle of Man

The Isle of Man is the most popular QROPS jurisdiction for 2013. This QROPS destination allows a much higher pension income to be paid out over time, so it is especially popular for those who wish to access a higher level of annual pension income. AN IOM QROPS is therefore a good option for those that may be in poor health and live in countries at retirement which have a DTA with the Isle of Man.

However if no DTA exists, a 20% income tax is imposed at source in the Isle of Man. The Isle of Man also has a 7.5% tax upon death which is deducted at source in the Isle of Man which is higher than other QROPS jurisidictions, most of which charge zero tax on death.

A 30% Pension Commencement Lump Sum (PCLS) is allowed in the Isle of Man after 5 years of being resident outside the UK. The pension income is usually higher than the 120% GAD rates which were previously allowed in the UK. In fact, your pension is worked out on your age and actuarial basis, but annual income can be high.

Countries which have a DTA with the Isle of Man

No. Country Where QROPS is Taxable Signed Effective Status
1 Australia Pensions only taxable in the country of residence 29 January 2009 6 April 2011 (Isle of Man) 1 July 2011 (Australia) In force
2 Bahrain Pensions only taxable in the country of residence 3 February 2011 1 January 2013 (Bahrain) 6 April 2013 (Isle of Man) In force
3 Belgium Pensions only taxable in the country of residence 16 July 2009 Awaiting ratification Not in force
4 Denmark Pensions taxable in the IOM 30 October 2007 1 January 2009 (Denmark)6 April 2009 (Isle of Man) In force
5 Estonia Pensions only taxable in the country of residence 8 May 2009 January 2010 (Estonia) 6 April 2010 (Isle of Man) In force
6 Faroe Islands Pensions taxable in the IOM 30 October 2007 1 January 2009 (Faroes) 6 April 2009 (Isle of Man) In force
7 Finland Pensions taxable in the IOM 30 October 2007 1 January 2009 (Finland) 6 April 2009 (Isle of Man) In force
8 Greenland Pensions taxable in the IOM 30 October 2007 1 January 2009 (Greenland) 6 April 2009 (Isle of Man) In force
9 Guernsey If pension earned from work in IOM = taxable in IOM otherwise taxable in country of residence(i.e. Guernsey) 24 January 2013 5 July 2013 In force
10 Iceland Pensions taxable in the IOM 30 October 2007 1 January 2009 (Iceland) 6 April 2009 (Isle of Man) In force
11 Ireland Pensions only taxable in the country of residence 24 April 2008 1 January 2009 (Ireland) 6 April 2009 (Isle of Man) In force
12 Jersey If pension earned from work in IOM = taxable in IOM otherwise taxable in Jersey 24 January 2013 21 June 2013 In force
13 Luxembourg Pension taxable in IOM unless pension not related to employment in which case taxable in country of residence (i.e. Luxembourg) 8 April 2013 Awaiting ratification Not in force

Click here for more info on the Isle of Man QROPS

QROPS Gibraltar

QROPS Gibraltar has taken over as the second most popular QROPS jurisdiction for British expatriates around the world. The Gibraltar QROPS destination is the de facto solution if you do not know where you will end up retiring in the world.

The Gibraltar QROPS avoids all UK taxes and has a flat rate of income tax of 2.5% which is deducted at source in Gibraltar. There are no taxes upon death.

Any country can be used with a QROPS in Gibraltar, you just pay the 2.5% income tax at source. It is then up to you to report any income in the country you retire in and pay income tax in that country.

A Gibraltar QROPS is very flexible and allows a huge range of investments from ETF’s to shares to mutual funds, gilds and commercial property.

A 25% Pension Commencement Lump Sum (PCLS) is allowed in Gibraltar. The pension income is usually 150% of UK GAD. At least 70% of the pension pot must be used to pay an annual retirement income for life.

Click here for more info on a QROPS in Gibraltar

QROPS Hong Kong

Hong Kong QROPS are back in favour again due to their strong Double Taxation Agreements (DTA’s).

Hong Kong QROPS are occupational, tax-recognised, registered and non-vested pension schemes. This makes them attractive investments for many countries due to the way they are perceived by foreign tax jurisdictions.

Furthermore, the various Double Taxation Agreements tend to give the taxation rights to Hong Kong, which means in many instances, your pension benefits can be paid out tax-free.

A 25% tax -free Pension Commencement Lump Sum (PCLS) is allowed to be paid out from your QROPS pension in Hong Kong. The rest must pay you an annual income for life.

A major benefit of a Hong Kong QROPS is that it also has a strong DTA with the UK, which could be important if you ever move back to the UK, as it gives the taxing rights to Hong Kong. However, if this is seen to be abused, you may still be taxed in the UK.

Countries which have a DTA with Hong Kong
Country / Territory Date of Entry into Force Effective From HK DTA PDF
Austria 01.01.2011 Year of Assessment 2012/2013 BO
Austria (Protocol) 03.07.2013 Year of Assessment 2013 CE
Belgium 07.10.2004 Year of Assessment 2004/2005 AJ
Brunei 19.12.2010 Year of Assessment 2011/2012 BK
Canada 29.10.2013 Year of Assessment 2014/2015 CF
Czech 24.01.2012 Year of Assessment 2013/2014 BY
France 01.12.2011 Year of Assessment 2012/2013 BT
Guernsey 05.12.2013 Year of Assessment 2014/2015 CH
Hungary 23.02.2011 Year of Assessment 2012/2013 BN
Indonesia 28.03.2012 Year of Assessment 2013/2014 BM
Ireland (see note 1) 10.02.2011 Year of Assessment 2012/2013 BQ
Italy 10.08.2015 Year of Assessment 2016/2017 CI
Japan (see note 2) 14.08.2011 Year of Assessment 2012/2013 BS
Japan (Exchange of Notes) (see note 3)

06.07.2015

Year of Assessment

2016/2017

BS
Jersey 03.07.2013 Year of Assessment 2014/2015 CG
Korea Pending Pending CL
Kuwait 24.07.2013 Year of Assessment 2014/2015 BZ
Liechtenstein 08.07.2011 Year of Assessment 2012/2013 BU
Luxembourg 20.01.2009 Year of Assessment 2008/2009 BA
Luxembourg (Protocol) 17.08.2011 Year of Assessment 2012/2013 BA
Mainland of China (see note 4) 10.04.1998 Year of Assessment 1998/1999 S
Mainland of China 08.12.2006 Year of Assessment 2007/2008 AY
Mainland of China (2nd Protocol) 11.06.2008 Year of Assessment 2098 BB
Mainland of China (3rd Protocol) 20.12.2010 Year of Assessment 2010 BR
Mainland of China (4th Protocol) (see note 5) Pending Year of Assessment Pending CU
Malaysia 28.12.2012 Year of Assessment 2013/2014 CC
Malta 18.07.2012 Year of Assessment 2013/2014 CB
Mexico 07.03.2013 Year of Assessment 2014/2015 CD
Netherlands (see note 6) 24.10.2011 Year of Assessment 2012/2013 BL
New Zealand 09.11.2011 Year of Assessment 2012/2013 BV
Portugal 03.06.2012 Year of Assessment 2013/2014 BW
Qatar 05.12.2013 Year of Assessment 2014/2015 CJ
South Africa 20.10.2015 Year of Assessment 2016/2017 CM
Spain 13.04.2012 Year of Assessment 2013/2014 BX
Switzerland (see note 7) 15.10.2012 Year of Assessment 2013/2014 CA
Thailand (see note 8) 07.12.2005 Year of Assessment 2006/2007 AX
United Arab Emirates (see note 9) Pending Year of Assessment Pending CN
United Kingdom 20.12.2010 Year of Assessment 2011/2012 BP
Vietnam 12.08.2009 Year of Assessment 2010/2011 BE
Vietnam (Protocol) 08.01.2015 Year of Assessment 2016/2017 BE

QROPS Malta

QROPS in Malta takes the no.3 QROPS jurisdiction for 2013. This popular QROPS destination is best used for British expats in Europe. Malta is an EU country and has 65 Double Taxation Agreements with countries around the world. For most of these countries, your QROPS will be paid out gross, free of tax in Malta. Although it does depend on the specific Double Taxation Agreements (DTA’s) between Malta and your country of residence in retirement.

Please note if you live in a country which DOES NOT have a DTA with Malta, you will pay tax of between 15% and 35% on any pension income which will be deducted at source in Malta. You may then also pay income tax in your country of residence, although you can often get foreign tax credits.

****PLEASE NOTE: The Malta QROPS Trustees will require EVIDENCE that a member is tax resident in a jurisdiction with a suitable DTA before any payment can be paid gross, otherwise tax in Malta will be deducted.*****

A 25% Pension Commencement Lump Sum (PCLS) is allowed in Malta if you take full flexible pension income like the UK. Flexible pension income is allowed in Malta, so you can draw your entire pension pot, the same as UK rules. However, you may pay Maltese income tax or the tax in your country of residence depending on the DTA’s at the time of your retirement.

Malta Income Tax Rates for 2008 – 2012

Chargeable Income € Tax Rate (%) Tax Deducted (€)
0 – 700 0% 0
701 – 3100 20% 140
3101 – 7800 30% 450
7801+ 35% 840

Countries which have a DTA with Malta

Country Date Signed Where Taxable DTA Article
Albania 02/05/2000 Pension income taxable in Albania Article 21
Australia 09/05/1984 Pension income taxable in Australia / temporary residents taxed in Malta Article 18
Armenia Initialled / being negotiated
Austria 29/05/1978 Pension income taxable in Austria Article 18
Azerbaijan Initialled / being negotiated
Bahrain 06/03/2012 Pension income taxable in Bahrain Article 20
Barbados 05/12/2001 Shared jurisdiction / pension income taxable in Malta
Belgium 28/06/1974 Pension income taxable in Belgium Article 21
Bosnia-Herzegovina Initialled / being negotiated
Bulgaria 23/07/1986 Pension income taxable in Malta Article 18
Canada 25/07/1986 Shared jurisdiction* Article 18
China 02/02/1993 Pension income taxable in China Article 22
Croatia 21/10/1998 Pension income taxable in Croatia Article 21
Cyprus 22/10/1993 Pension income taxable in Cyprus Article 22
Czech Republic 21/06/1996 Pension income taxable in Czech Republic Article 21
Denmark 30/12/1998 Pension income taxable in Denmark Article 18
Egypt 20/02/1999 Pension income taxable in Malta Article 18
Estonia 03/05/2001 Shared jurisdiction / pension income taxable in Malta Article 21
Finland 30/10/2000 Pension income taxable in Finland / Annuity Income taxable in Malta Article 18
France 29/08/2008 Pension income taxable in France Article 22
Georgia 23/10/2009 Pension income taxable in Georgia Article 21
Germany 08/03/2001 Pension income taxable in Germany Article 18
Greece 13/10/2006 Pension income taxable in Greece Article 21
Guernsey 10/3/2013 Pension income taxable in Guernsey Article 20
Hong Kong 8/11/11 Pension income taxable in Malta Article 17
Hungary 06/08/1991 Pension income taxable in Hungary Article 22
Iceland 23/09/2004 Pension income taxable in Iceland Article 21
India 08/09/1994 Shared jurisdiction / pension income taxable in Malta Article 23
Ireland 14/11/2008 Pension income taxable in Ireland Subject to remittance limitation**
Isle of Man 23/10/2010 Pension income taxable in the Isle of Man Article 21
Israel Signed – Not yet in force
Italy 16/07/1981 Pension income taxable in Italy Subject to remittance limitation**
Jersey 19/07/2010 Pension income taxable in Jersey Article 21
Jordan 16/04/2009 Shared jurisdiction / pension income taxable in Malta Article 21
Korea 25/03/1997 Pension income taxable in Korea Article 21 – Subject to remittance limitation**
Kuwait 24/07/2002 Pension income taxable in Kuwait Article 22
Latvia 22/05/2000 Shared jurisdiction taxable in Malta Article 22
Lebanon 16/04/2010 Pension income taxable in Lebanon Article 21
Libya 28/12/2008 Pension income taxable in Libya Article 23
Lithuania 17/05/2001 Shared jurisdiction taxable in Malta Article 22
Luxembourg 29/04/1994 Pension income taxable in Luxembourg Article 21
Malaysia 03/10/1995 Pension income taxable in Malaysia Article 18
Mexico Initialled / being negotiated
Moldova Initialled / being negotiated
Montenegro 04/11/2008 Pension income taxable in Montenegro Article 21
Morocco 26/10/2001 Pension income taxable in Morocco Article 18
Netherlands 18/07/1995 Pension income taxable in the Netherlands Article 19
Norway 02/06/1975 Shared Jurisdiction* Article 18
Oman Initialled/being negotiated
Pakistan 08/10/1975 Pension income taxable in Pakistan Article 21
Palestine Signed – Not yet in force
Poland 07/01/1994 Pension income taxable in Poland Article 22
Portugal 26/01/2001 Pension income taxable in Portugal Article 21
Qatar 26/08/2010 Pension income taxable in Qatar Article 18
Romania 30/11/1995 Pension income taxable in Romania Article 23
Russia Signed – Not yet in force Being renegotiated
San Marino 10/09/2009 Pension income taxable in San Marino Article 21
Saudi Arabia Signed – Not yet in force
Serbia 16/06/2010 Pension income taxable in Serbia Article 21
Singapore 29/02/2008 Shared Jurisdiction / Pension income taxable in Malta
Slovakia 07/09/1999 Pension income taxable in Slovakia Article 21
Slovenia 08/10/2002 Pension income taxable in Slovenia Article 22
South Africa 16/05/1997 Shared jurisdiction / pension income taxable in South Africa Article 18
Spain 08/11/2005 Pension income taxable in Spain Article 21
Sweden 09/10/1995 Pension income taxable in Sweden Article 21
Switzerland 06/07/2012 Pension income taxable in Switzerland Article 21
Syria 22/02/1999 Pension income taxable in Syria Article 21
Thailand Initialled / being negotiated
Tunisia 31/05/2000 Pension income taxable in Tunisia Article 21
Turkey Signed – Not yet in force
UAE 13/03/2006 Pension income taxable in the UAE Article 21
Ukraine Initialled / being negotiated
United Kingdom 12/05/1994 Pension income taxable in the United Kingdom Article 18 – Subject to remittance limitation**
United States of America 10/11/2010 Pension income taxable in the USA Article 17 – Double Taxation Relief Order
Uruguay 11/3/11 Pension income taxable in Uruguay Article 20

MALTA DOUBLE TAXATION AGREEMENT DETAILS

Whilst the majority of DTAs provide for pension income to be taxed in the country of residence of the member, there are some exceptions.

1. Shared Jurisdiction*:

In the cases of shared jurisdiction these treaties give the source state (Malta) primary tax jurisdiction, with tax relief granted in the Residence State for any tax deducted in Malta. For Canada and Norway, pension income is taxable in Malta, capped at 15%, members can elect to have their pension income taxed in Canada.

2. Subject to Remittance Limitation**:

Some of the DTAs have a “remittance limitation” clause included, which requires the pension income to be remitted to a bank account in that country in order to obtain relief from tax in Malta. However this only comes into force if the country of residence only taxes pension income on a remitted basis (as opposed to a worldwide basis).

The only countries that have a remittance clause and tax on a remittance only basis are:

UK and Ireland – where payments are made to individuals resident but non domiciled in Ireland, the pension payment should be received (paid directly by the Trustee) or remitted (subsequently transferred by the beneficiary) to Ireland. Korea – where payments are made to inward expatriates that have been resident in Korea for not more than 5 years in a 10 year period the pension payment should be received (paid directly by the Trustee) or remitted (subsequently transferred by the beneficiary) to Korea.

********The Trustees will require evidence that a member is tax resident in your country of retirement with a suitable DTA with Malta before allowing your pension payment to be paid gross.***********

Please click here for more info on a pension transfer to a QROPS in Malta

QROPS New Zealand

QROPS in New Zealand had fallen out of favour as you need to use a Discretionary Fund Manager (DFM) which means your pension options are usually limited to five options based on risk, so for people who usually invest via UK SIPP’s this may seem limiting. However, this may be one of the safest routes for QROP schemes precisely due to this fact. I encourage any non-sophisticated investors to seriously consider this Qualifying Overseas Pension Scheme in New Zealand.

There is zero tax in New Zealand, it is a secure tax neutral QROPS jurisdiction which has very strong pension regulations and protection from the Financial Markets Authority in New Zealand.

There in no tax on income and no tax on death if you remain resident outside the UK.

In this way, NZE offers a tax simple, tax certain solution for your clients. Importantly, it also means that a NZ QROPS is a future proof solution. You don’t need to transfer your QROPS to another jurisdiction because you no longer live in a country where the current host QROPS has a Double Taxation Agreement (DTA) in operation.

Also, you can take up to 100% of any increase in the value of your pension pot as a tax-free cash lump sum along with the usual 30%. You also are not required to take a pension like you do in other QROPS jurisidctions. So, if your pension just wants to be invested conservatively and passed onto your children, there is no safer destination to park your pension than in New Zealand, an OECD country.

Under an NZ QROPS, the scheme must provide you with an annual pension income with 70% of the pension pot that is transferred.

Also, the fees on QROPS in New Zealand are now lower than before. You can set up a QROPS in New Zealand for 200 GBP set up fee and 200 GBP per year after for smaller pension pots. Larger pensions are 750 GBP set up fee and 500 GBP per year after.

We see a NZ QROPS as an appropriate destination especially for clients already in retirement as a safe, tax-neutral QROPS destination appropriate for inheritance planning. There is no tax on income or death in NZ, you just pay income tax in your current of residence.

Examples of countries where you would pay no income tax on a NZ QROPS pension include Dubai (UAE), Brunei, Hong Kong, Malaysia, Philippines, Singapore, Thailand, South Africa, Qatar, Kuwait, Oman, Monaco, Portugal (to qualify, you need to register as a non-habitual resident with the Portuguese tax authorities), Latin America: Belize, Costa Rica, Ecuador, Uruguay and Panama, the Caribbean islands: Anguilla, Bahamas, Bermuda, Cayman Islands, British Virgin Islands, Turks and Caicos as well as Vanuata (near Australia).

Click here to see more low tax countries for British expats.

List of Countries which have a DTA with New Zealand

Australia
Austria
Belgium
Canada
Chile
China
Czech Republic
Denmark
Fiji
Finland
France
Germany
Hong Kong
India
Indonesia
Ireland
Italy
Japan
Korea
Malaysia
Mexico
Netherlands
Norway
Philippines
Poland
Russia Federation
Singapore
South Africa
Spain
Sweden
Switzerland
Taiwan
Thailand
Turkey
United Arab Emirates
United Kingdom
United States of America

Click here for more info on a QROPS pension transfer to NZ