QROPS Vietnam. Pension Tax Relief
British expats living in Vietnam or wishing to retire in Vietnam can now transfer their pension into a QROPS Vietnam to maximize pension tax relief. Britsh expats living or working in Vietnam can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like Gibraltar and will no longer have to pay UK taxes on their pension if they stay offshore.
Also, any Vietnamese who have worked for a UK company can transfer their pension outside of the UK tax net if they are going to retire outside the UK. Vietnamese who have worked in the UK and built up a substantial pension can avoid up to 45% tax upon death in the UK after 75, as well as avoiding UK income tax which is up to 45%.
Why live or retire in Vietnam as a British expat?
Over 3,800 Brits live and work in Vietnam. Vietnam is a relative newcomer to the oil business, but today it is the third-largest oil producer in Southeast Asia with output of 400,000 barrels per day. Vietnam is one of Asia’s most open economies: two-way trade is around 160% of GDP, more than twice the ratio for China and over four times India’s. The economy has been growing at between 6% and 8% for the last 20 years.
In 2009, the nominal GDP reached $92.439 billion with nominal GDP per capita of $1,06. According to a forecast in December 2005 by Goldman-Sachs, Vietnamese economy will become the 17th largest economy in the world in 2025, with nominal GDP of $ 436 billion and GDP per capita of 4,357 USD. According to the forecast by PwC in 2008, Vietnam may be fastest growing of emerging economies by 2025 with a potential growth rate of almost 10% p.a. in real dollar terms that could push it up to around 70% of the size of the UK economy by 2050.
As a result of several land reform measures, Vietnam is now the largest producer of cashew nuts with a 1/3rd global share, the largest producer of black pepper accounting for 1/3rd of the world’s market and second largest rice exporter in the world after Thailand. Vietnam has the highest percent of land use for permanent crops, 6.93%, of any nation in the Greater Mekong Sub-region. Besides rice, key exports are coffee, tea, rubber, and fishery products.
For Brits living in Vietnam, 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.
Normally your money grows offshore tax-free in a safe jurisdiction such as Gibraltar when you draw your income it is paid with just a flat rate of 2.5% deducted. This can then be paid into an offshore account (e.g. a bank account in the Isle of Man) or into a Vietnamese bank account if you have one.
QROPS Vietnam. Benefits of Pension Transfer to Vietnam
What are the benefits of a UK Pension Transfer for British expats in Vietnam,?
• 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 Gibraltar which is under the protection of the British Crown, but has its own strong financial regulations which are tax efficient
What is the economy of Vietnam like?
Economic outlook for the Vietnamese economy in 2011: The ADB cut its forecast for GDP growth in 2011 to 6.1% from 7%, arguing that if the government successfully implements its fiscal and monetary tightening policies, growth will slow but inflation will be brought under control eventually. Investors and government officials in China are spooked out by annual inflation of 4.9%. But in Vietnam, consumer prices rose by 13.9% year-on-year in March.
What is a QROPS Vietnam?
A Qualifying Recognized Overseas Pension Scheme (QROPS Vietnam) 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 Vietnam 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 a useful way to avoid UK taxation if you are considering living or retiring abroad. Please email us and we will prepare a free pension transfer analysis.
Personal Income Tax in Vietnam
What would the tax be on a QROPS in Vietnam?
Anyone who spends more than 183 days per year in Vietnam is considered a resident. For British expats resident in Vietnam, you would get taxed on your worldwide income.
The personal allowance is 48m Vietnamese Dong per year.
Above this amount, British expats in Vietnam would be charged between 5% and 35%. Exact details can be found here.
Your QROPS would be paid gross in NZ or would have a 2.5% flat income tax if you opt for a QROPS in Gibraltar. Your pension income can be then paid to an offshore bank account or remitted to Vietnam where it would be taxed as above.
Can I Move My UK Pension to a QROPS in Vietnam
Do I need to move my pension to Vietnam?
No. Vietnam does not have any QROPS. Your pension can be transferred to a secure jurisdiction such as Gibraltar or New Zealand where it will be out of the UK tax system and your pension will grow tax free.
Do I need to live and retire in Vietnam?
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 return to UK Self Invested Personal Pension (SIPP) rules, but you would also get time apportionment relief. You would also have had the chance to have taken a bigger lump sum.
For enquiries, please send email to firstname.lastname@example.org
Pension tax relief for British expats, QROPS Vietnam article written by QROPS Specialists.QROPS Vietnam - UK Pension Transfer for British Expats to Avoid Paying Taxes by Richard Malpass