QROPS Switzerland. Avoiding Taxes for British Expats in Switzerland
British expats living in Switzerland or wishing to retire in Switzerland can now transfer their pension into a QROPS Switzerland to avoid UK taxes. British expats living or working in Switzerland can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like either Switzerland or Malta and will no longer have to pay UK taxes on their pension if they stay offshore. Swiss working in the UK and Swiss who have built up a substantial pension in the UK in the past can transfer to a QROPS to avoid UK taxes.
In nominal terms, Switzerland is one of the richest countries in the world by per capita gross domestic product, with a nominal per capita GDP of $69,838. In 2010, Switzerland had the highest wealth per adult of any country in the world (with $372,692 for each person).
Switzerland also has one of the world’s largest account balances as a percentage of GDP, only placing behind a few oil producing countries. Zurich and Geneva have respectively been ranked as the cities with the second and third highest quality of life in the world. In 2010 the World Economic Forum ranked Switzerland as the most competitive country in the world, while ranked by the European Union as Europe’s most innovative country by far.
Switzerland comprises three main linguistic and cultural regions: German, French, and Italian, to which the Romansh-speaking valleys are added. The Swiss therefore do not form a nation in the sense of a common ethnic or linguistic identity. The strong sense of belonging to the country is founded on the common historical background, shared values (federalism, direct democracy, neutrality) and Alpine symbolism.
Why live or retire in Switzerland?
More than 49,000 Brits live and work in Switzerland including 5,450 pensioners. For the Brits living in Switzerland, you can take advantage of your offshore address to reduce UK tax on your pension as well as protect your wife and children from high UK taxation should anything happen to you.
Switzerland has more than 1500 lakes, including Lake Geneva, Lake Constance and Lake Maggiore. Switzerland contains 6% of Europe’s stock of fresh water. Lakes and glaciers also cover about 6% of the national territory. You are spoiled with alpine skiing in Switzerland; hiking and mountain biking take precedence in summer. Christianity is the predominant religion of Switzerland, divided between the Catholic Church (41.8% of the population) and various Protestant denominations (35.3%). Among the most important cultural performances held annually are the Lucerne Festival, the Montreux Jazz Festival and the Locarno International Film Festival.
Why Transfer to a QROPS in Switzerland?
What are the benefits of a QROPS Switzerland Pension Transfer for British expats?
• Avoid UK income tax
• Avoid UK dividends tax
• Avoid UK capital gains tax (CGT)
• Avoids 55% tax upon death when drawing benefits
• 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 Switzerland or Malta which have their own strong financial regulations which are tax efficient
What is QROPS Switzerland?
A Qualifying Recognized Overseas Pension Scheme (QROPS Switzerland) 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 Switzerland 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 vehicle to avoid UK taxes if you are considering living or retiring abroad.
Swiss QROPS or Malta QROPS?
Both have their own benefits and disadvantages. Swiss QROPS are often funneled into Swizz annuities. Annuities are at an all-time low at the moment due to low interest rates on government gilts and treasuries. Many prefer to transfer to Malta which has a double taxation agreement with Switzerland, but allows a greater freedom of investment choice.
What is the economy like in Switzerland?
Switzerland has a stable and modern economy. It has the highest European rating in the Index of Economic Freedom 2010, while also providing large coverage through public services. The nominal per capita GDP is higher than those of the larger Western and Central European economies and Japan (and indeed one of the highest in the world). The Swiss franc remains one of the world’s strongest currencies with the lowest inflation rate (rising to an estimated 0.7% for 2011).
If adjusted for purchasing power parity, Switzerland ranks sixteenth in the world for GDP per capita. The World Economic Forum’s Global Competitiveness Report currently ranks Switzerland’s economy as the most competitive in the world. For much of the 20th century, Switzerland was the wealthiest country in Europe by a considerable margin. In 2010, the Global Wealth Report by Credit Suisse Research Institute found that Switzerland has the highest average wealth per adult at $372,692.
Chemicals, health and pharmaceutical, measuring instruments, musical instruments, real estate, banking and insurance, tourism, and international organizations are important industries in Switzerland. The largest exported goods are chemicals (34% of exported goods), machines/electronics (20.9%), and precision instruments/watches (16.9%). Exported services amount to a third of exported goods.
Switzerland has an overwhelmingly private sector economy and low tax rates by the Western World standards; overall taxation is one of the smallest of developed countries. Switzerland is an easy place to do business; Switzerland ranks 21st of 178 countries in the Ease of Doing Business Index. Switzerland has low home ownership with only 37% of residents owning a house. Agricultural protectionism, a rare exception to Switzerland’s free trade policies, has contributed to high food prices.
QROPS Switzerland. Pension Tax Relief
Do I need to move my pension to Switzerland?
No. If you wish you can transfer to a Swiss QROPS or alternatively, you can transfer to Malta which is also in the EU, but has a double taxation agreement with Switzerland and will also be out of the UK tax system. Your pension will be paid gross and grow tax free.
Do I need to live and retire in Switzerland?
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 and you will likely avoid a lot of the tax upon death due to time apportionment relief.
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QROPS Switzerland article written by QROPS Specialists.QROPS Switzerland by Richard Malpass