QROPS Yemen. Pension Tax Relief
British expats living in Yemen or wishing to retire in Yemen or abroad can now transfer their pension into a QROPS Yemen to maximize pension tax relief. British expats living or working in Yemen can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like the Gibraltar and will no longer have to pay UK taxes on their pension if they stay offshore. Any Yemenis who have worked in the UK can also move to a QROPS Yemen to avoid UK taxes if they have a substantial pension they have built up by working in the UK.
Yemen is one of the poorest and least developed countries in the Arab World, with a 14.6% unemployment rate, dwindling natural resources, a young population and increasing population growth. Yemen’s economy is weak compared to most countries in the Middle-East, mainly because Yemen has very small oil reserves.
Yemen’s economy depends heavily on the oil it produces and its government receives the vast majority of its revenue from oil taxes. But Yemen’s oil reserves are expected to be depleted by 2017, possibly bringing on economic collapse. Yemen does have large proven reserves of natural gas. Yemen’s first liquified natural gas (LNG) plant began production in October 2009.
Why live and retire in Yemen as a British expat?
Over 3,400 Brits live and work in Yemen, of which 3,386 are pensioners. For the Brits living in Yemen, 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. In the UK there is 55% tax upon death, but you can avoid this with a transfer to Gibraltar.
How Does a QROPS Pension Transfer to Yemen Work?
There are no QROPS in Yemen. You need to transfer to a QROPS in Gibraltar. Your pension gets transferred in cash to the trustees in Gibraltar who look after your pension. They use actuaries to calculate your pension income when it comes time to draw your income. But, the monies are normally invested in the Isle of Man with large companies such as Friends Provident, Generali or Royal Skandia. These companies simply hold your money and perform the day to day administrative chores as well as buy/sell funds and shares for you. Through a QROPS, you can invest in almost anything such as individual shares, ETF’s, mutual funds, bond funds and hedge funds to try to maximise the growth of your pension.
A pension transfer to a QROPS Yemen will help you avoid UK taxes. Even if you don’t retire in Yemen, as long as you retire outside the UK, you can take adavantage of your Yemeni address to transfer to a QROPS Yemen.
What are the Benefits of a QROPS Yemen
What are the benefits of a QROPS Yemen Pension Transfer for British expats?
• 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 QROPS Yemen?
A Qualifying Recognized Overseas Pension Scheme (QROPS Yemen) 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 10years of living offshore, the reporting requirements to HMRC cease.
If you are living in Yemen at the moment, you can take advantage of your offshore address in order to move your UK pension into a QROPS Yemen to avoid further UK taxes down the line. A QROPS Yemen is the perfect vehicle to avoid UK taxes if you are considering living or retiring abroad.
What are the taxes in Yemen like for British expats?
Yemen personal income tax rates are up to 35%. Tax rates are:
10% to 20% for resident salaried individuals; and
10% to 35% for other taxpayers
Taxes are imposed upon income from employment, commercial or industrial activities and noncommercial activities (i.e. the exercise of a profession) if taxable income exceeds YER 36,000 per year.
What defines a Yemeni resident if you are a British expat living or working in Yemen?
An individual is resident in Yemen for a tax year if he/she is (1) a Yemeni national who has a permanent residence in Yemen or is present in Yemen for a period that in total is not less than 4 months in the tax year; (2) a national of an Arab country working in Yemen, irrespective of the period of residence; (3) a non-Yemeni national from a non-Arab country who has been resident in Yemen during the tax year for a period of not less in total than 4 months or has lived in Yemen for 2 consecutive months; or (4) a non-Yemeni national from a non-Arab country who is resident in Yemen, irrespective of the period of the residence, and is employed by a Yemeni corporation.
What income is taxable a British expat in Yemen?
Resident individuals are taxed on income from employment, commercial or industrial activities and noncommercial activities (i.e. exercise of a profession) earned inside or outside Yemen. Nonresidents are taxed on their income in Yemen and arising from the carrying out of an activity or a profession or from an individual transaction, irrespective of the period in which transacted. Individuals are exempt from tax on income from treasury bonds, interest from bank deposits, savings in post offices and income from shares in public and shareholding companies.
There is no capital gains tax or IHT. The standard rate of corporate tax is 35%. This may be reduced to 20% in 2011.
If you move your pension to Gibraltar there will be zero UK taxation. Your pension will grow tax free. However, you would pay a flat rate of tax of 2.5% on your pension when you decide to receive income from it which is taxed at source in Gibraltar. You may also pay income tax in Yemen, but crucially you avoid the 55% tax upon death and have the freedom to invest in most shares, ETF’s, mutual funds and hedge funds as you see fit.
What Happens to My QROPS if I Move My from Yemen?
Do I need to move my pension to Yemen?
No. If you are a British expat or have ever worked in the UK, your pension can be transferred to a jurisdiction such as Gibraltar where it can grow without having to pay any UK taxes. Your pension can then be paid into your local bank account or an offshore bank.
Do I need to live and retire in Yemen?
No. But, you need to have an offshore address in order to move your pension abroad. You can then live or retire anywhere outside the UK. If you ever move back to the UK, your pension will revert to typical UK SIPP rules. If you retire elsewhere, you will likely have to pay the income tax in that country on your pension.
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Pension tax relief for British expats, QROPS Yemen article written by QROPS Specialists.QROPS Yemen Pension Transfer for British Expats to Avoid Paying Taxes by Richard Malpass