QROPS the Netherlands. British Expats and Dutch Expats Can Now Avoid Taxes
British expats living in the Netherlands or wishing to retire in the Netherlands (retire in Holland) can now transfer their pension into a QROPS the Netherlands to avoid UK taxation on existing pensions. Dutch expats can also transfer their private pensions offshore to avoid taxes in the UK. British expats living or working in The Netherlands (Holland) can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like Malta which is in the EU and has a Double Taxation Agreement with the Netherlands so a move to a QROPS means no longer having to pay UK taxes on their pension if they stay offshore.
Why live and retire in the Netherlands (Holland) as a British expat?
Over 48,000 Brits live or work in the Netherlands (Holland). The Netherlands has a capitalist market-based economy, ranking 15th of 157 countries according to the Index of Economic Freedom. In May 2011, the Netherlands was ranked as the ‘happiest’ country according to results published by The Organization for Economic Cooperation and Development.
The country is divided into two main parts by three large rivers, the Rhine (Rijn) and its main distributaries, the Waal and the Meuse. Floods have been a menace to the Netherlands and dikes have been constructed to guard the towns. By the 13th century, windmills had come into use in order to pump water out of areas below sea level. The windmills were later used to drain lakes, creating the famous polders. The predominant wind direction in the Netherlands is southwest, which causes a moderate maritime climate, with cool summers and mild winters.
The Dutch are made up of 80.9% Dutch, 2.4% Indonesian (Indo-Dutch, South Moluccan), 2.4% German, 2.2% Turkish, 2.0% Surinamese, 2.0% Moroccan, 0.8% Antillean and Aruban, and 6.0% others (2005 est.). They are the tallest nation on the planet. The Netherlands is one of the most secular countries in Western Europe, with only 39% being religiously affiliated (31% for those aged under 35), and fewer than 20% visiting church regularly. Windmills, tulips, wooden shoes, cheese, Delftware pottery, and cannabis are among the items associated with the Netherlands by tourists.
QROPS the Netherlands. British Expats in the Nethelands
What are the benefits of a QROPS Holland Pension Transfer for British expats?
• Avoid UK income tax
• Avoid UK dividends tax
• Avoid UK capital gains tax (CGT)
• Avoid 55% tax upon death when drawing your income
• 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 is under the protection of the British Crown, but has its own strong financial regulations which are tax efficient
What is a QROPS the Netherlands?
A Qualifying Recognized Overseas Pension Scheme (QROPS The Netherlands) 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 can take a 30% lump sum at 55 as long as you have been offshore for 5 years, otherwise you can only take 25%.
If you are living in The Netherlands 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. A QROPS is an appropriate legal vehicle to avoid UK taxes if you are considering living or retiring abroad.
Dutch Expats in the Netherlands
In most Dutch schemes when the last remaining partner dies, all monies within your pension fund are lost as they are retained by the fund. By transferring to an EU-approved scheme you will be able to pass on the assets to whomever you designate as a beneficiary, thus providing additional security for your loved ones. Also like the UK there may be tax charged on income in Holland (up to 52%) if your pension remains there.
There are several requirements that must be met in order for any transfer of your Dutch pension funds to be considered. You will usually need to be in current employment in your county of residence and will need to provide a copy of your employment contract. We will then complete the required forms and submit them to the Dutch Tax Authorities for confirmation that the transfer can take place.
In addition certain criteria have to be met each year for the first 10 years after your pension fund has been transferred out of Holland. These include a reporting requirement to the Dutch Tax Authorities of any payments made during this time and advising them if the pension funds are for some reason transferred to another scheme. Also during the first 10 years no “lump sum” can be taken from the Plan.
What is the economy like in the Netherlands (Holland)?
The Netherlands has a very strong economy and has been playing a special role in the European economy for many centuries. Since the 16th century, shipping, fishing, trade, and banking have been leading sectors of the Dutch economy. The Netherlands is one of the world’s 10 leading exporting countries. Foodstuffs form the largest industrial sector. Other major industries include chemicals, metallurgy, machinery, electrical, goods and tourism. Examples include Unilever, Heineken, financial services (ING), chemicals (DSM), petroleum refining (Shell), electronical machinery (Philips, ASML) and car navigation TomTom.
The Netherlands has the 16th largest economy in the world, and ranks 7th in GDP (nominal) per capita. Between 1998 and 2000 annual economic growth (GDP) averaged nearly 4%, well above the European average. GDP in 2011 is set to grow at 1.5%; inflation 2.3%. Dutch rank third worldwide in value of agricultural exports, behind the United States and France. Netherlands also exports a quarter of all world tomatoes, and one-third of the world’s exports of chilis and cucumbers.
QROPS in the Netherlands. QROPS in Holland
Do I need to move my pension to the Netherlands (Holland)?
No. Your pension can be transferred to a secure jurisdiction such as Malta which has a double taxation agreement with the Netherlands and it is out of the UK tax system and your pension will be paid gross and grow tax free avoiding tax upon death.
Do I need to live and retire in the Netherlands (Holland)?
No, you can live anywhere offshore. As long as you are outside the UK, your QROPS will grow free of UK tax. If you ever return to live permanently in the UK, your pension will simply return to UK Self Invested Pension Plan (SIPP) rules, except you will likely pay little or no tax upon death due to time apportionment relief.
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QROPS the Netherlands article written by QROPS Specialists.QROPS in the Netherlands. British Expats and Dutch Expats Can Avoid Taxes on Pensions by Richard Malpass