QROPS Switzerland. Avoiding Taxes for British Expats in Switzerland
Transferring your UK pension into a Switzerland QROPS in order to avoid UK taxes is an option for those seeking to live or retire in Switzerland. If you do not plan to live in Switzerland but are planning to retire outside of the UK, a QROPS is a viable option for avoiding UK pension taxation. Swiss residents who have worked and built up a pension in the UK are also able to take advantage or QROPS, again avoiding 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?
If you wish to become one of the 49,000 plus Brits who live and work in Switzerland your offshore address will enable you to protect your wife and family from UK taxation in the event of your death while reducing your tax burden throughout your time outside the UK.
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?
QROPS or a Qualifying Recognized Overseas Pension Scheme is a financial option that enables those of you who decide to retire or work outside of the UK to transfer your pension to a place such as Switzerland. This means that you do not have to pay UK tax on your pension for as long as you remain abroad. Once you have been offshore for 10 years, HRMC reporting requirements no longer apply to you.
Those of you currently residing in Switzerland are able to use your offshore address to transfer your UK pension into a QROPS, thereby eliminating the requirement to pay UK taxes. If you currently live abroad or plan to retire abroad, a QROPS specialist can help you review the benefits of transferring your pension.
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.
Switzerland’s Current Economic Situation
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
Is Switzerland My Only Pension Transfer Option?
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.
Am I Forced To Live in Switzerland?
You are not required to live in Switzerland. So long as you reside outside the UK you can enjoy pension growth exempt from UK taxes. Those of you who decide to permanently return to the UK will have your pension subject to SIPP rules, but in all likelihood, the time apportionment relief will have saved you considerably on your taxes upon death.
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QROPS Switzerland article written by QROPS Specialists.QROPS Switzerland by Richard Malpass