QROPS Turkey. Avoid Taxes for British Expats in Turkey

QROPS Turkey. Avoiding Taxes for British Expats in Turkey

British expats living in Turkey or wishing to retire in Turkey can now transfer their pension into a QROPS Turkey to maximize pension tax relief. British expats living or working in Turkey can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like the Malta or New Zealand and will no longer have to pay UK taxes on their pension if they stay offshore.
Turks working in the UK and Turks who have worked in the UK and built up a substantial pension can also transfer their pensions offshore to avoid UK taxes, in particular the 55% tax upon death whilst drawing your pension income and UK income taxes.

qrops-turkey

QROPS Turkey

Why do British expats live or retire in Turkey?

More than 38,000 Brits live and work in Turkey with over 900 pensioners. For the Brits living in Turkey, 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 taxation should anything happen to you. One of the benefits of a QROPS Turkey pension transfer is the availability to hold multiple currencies, so you could hold your pension in Euros or Pounds or both. Turkey is one of the six independent Turkic states. The vast majority of the population are Muslims. The country’s official language is Turkish, whereas Kurdish and Zazaki languages are spoken by Kurds and Zazas, who comprise 18% of the population.

Turkey has the world’s 15th largest GDP-PPP and 17th largest Nominal GDP. The country is a founding member of the OECD and the G-20 major economies. During the first 6 decades of the republic, between 1923 and 1983, Turkey has mostly adhered to a quasi-statist approach with strict government planning of the budget and government-imposed limitations over private sector participation, foreign trade, flow of foreign currency, and foreign direct investment. However in 1983 Prime Minister Turgut Özal initiated a series of reforms designed to shift the economy from a statist, insulated system to a more private-sector, market-based model.

The reforms spurred rapid growth, but this growth was punctuated by sharp recessions and financial crises in 1994, 1999 (following the earthquake of that year) and 2001, resulting in an average of 4% GDP growth per annum between 1981 and 2003. Lack of additional fiscal reforms, combined with large and growing public sector deficits and widespread corruption, resulted in high inflation, a weak banking sector and increased macroeconomic volatility. Since the economic crisis of 2001 and the reforms initiated by the finance minister of the time, Kemal Derviş, inflation has fallen to single-digit numbers, investor confidence and foreign investment have soared, and unemployment has fallen.

QROPS Turkey. Pension Tax Relief

What are the benefits of a QROPS Pension Transfer for British expats in Turkey?

• Avoid UK income tax
• Avoid UK dividends tax
• Avoid UK capital gains tax (CGT)
• Avoid 55% tax upon death
• 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 New Zealand or Malta which is under the protection of the British Crown, but has its own strong financial regulations which are tax efficient

What is QROPS Turkey?

A Qualifying Recognized Overseas Pension Scheme (QROPS Turkey) 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 Turkey 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.

What is the economy like in Turkey?

Turkey has gradually opened up its markets through economic reforms by reducing government controls on foreign trade and investment and the privatization of publicly owned industries, and the liberalization of many sectors to private and foreign participation has continued amid political debate. The public debt to GDP ratio, while well below its levels during the recession of 2001, reached 46% in 2010 Q3. GDP growth rate from 2002 to 2007 averaged 7% which made Turkey one of the fastest growing economies in the world for that period. However, growth slowed to 1% in 2008, and in 2009 the Turkish economy was affected by the global financial crisis, with a recession of 5%. The economy was estimated to have returned to 8% growth in 2010 and forecast 4.6% for 2011.

The tourism sector has experienced rapid growth in the last twenty years, and constitutes an important part of the economy. In 2008 there were 31 million visitors to the country, who contributed $22 billion to Turkey’s revenues. Other key sectors of the Turkish economy are banking, construction, home appliances, electronics, textiles, oil refining, petrochemical products, food, mining, iron and steel, machine industry and automotive. Turkey has a large and growing automotive industry, which produced 1,147,110 motor vehicles in 2008, ranking as the 6th largest producer in Europe. Turkey is a leading ship building nation.

What are the Taxes on My QROPS in Turkey?

If you transfer to a New Zealand QROPS or Malta QROPS, both have a double taxation agreement with Turkey, so your pension will be paid out tax free in those countries. You would then pay the relevant taxes in Turkey.

What is Income Tax in Turkey?

Your resident in Turkey if you are there for more than six tax months in the year.

For employment income:

Taxable income bracket Tax rate on income in bracket

From TRY To TRY Percent

1 – 10,000                      15%
10,001 – 25,000           20%
25,001 – 88,000           27%
88,001 Over                  35%

For other types of income including QROPS:

Taxable income bracket Tax rate on income in bracket

From TRY To TRY Percent

1 – 10,000                        15%
10,001 – 25,000             20%
25,001 – 58,000             27%
58,001 – Over                 35%

Do I need to move my pension to Turkey?

There are only 3 QROPS in Turkey at the time of writing in June, 2013.
Allianz Hayat ve Emeklilik A. S. Pension Plan Code – 102
Garanti Emeklilik Premium Pension Plan with Initial Lump Sum Payment
Yapi Kredi Emeklilik Safran Pension Plan

Do I need to move my pension to Turkey?

No, there are many more schemes in NZ and Malta. Malta in particular allows for a much wider range of investments to be allowed and is popular with clients. You can invest in bonds, gilts, shares, mutual funds, ETF’s, inflation protected securities or just hold in cash.

Do I need to live and retire in Turkey?

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. Your income tax will be dependent on the country you retire in however.

For enquiries, please send email to info@qropsspecialists.com

QROPS Turkey article written by QROPS Specialists.

QROPS Turkey. Avoid Taxes for British Expats in Turkey by

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About Richard Malpass

Richard Malpass is a financial advisor from the UK who has been in Thailand for 14 years and helps British expats with fiduciary advice. He works for Credenda Associates in Bangkok. He covers Thailand, Vietnam, Laos, Cambodia and the Asian region by air and covers the rest of the world via post, telephone and internet.

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