Country of Jurisdiction
Basically, a QROPS jurisdiction is the country where your UK pension can be transferred to. QROPS schemes may be formed in these countries to take advantage of the favourable tax rules (e.g. Gibraltar, the Isle of Man), or simply because there are a lot of British expats living their (Australia, France, Ireland). The latter tend not to present any major tax advantages over the UK and in some cases are more punitive. The former are currently growing from strength to strength as expats learn more about their existence and race to transfer to favourable tax treatment before the UK puts a stop to it all.
Malta, Gibraltar and the Isle of Man are known for their financial stability and favourable tax treatment. However, because fiscal laws vary from country to country, one QROPS does not fit all – and expert advice is needed to decide which jurisdiction is the best for your needs.
One key factor in deciding which QROPS jurisdiction is right for you is where you plan to retire in the future. If you live in France, for example, a Malta QROPS may be the best option due to the direct tax treaty between the two countries – meaning you would not pay income tax twice. If you live in Thailand however, a Malta QROPS would not be appropriate – as there is no direct tax treaty and you would be hit with their highest rate of income tax - a hefty 35%! Instead, a Gibraltar QROPS may be the best option, as Gibraltar offers a low, 2.5% tax on pension income wherever you are based.
Just this simple example hopefully demonstrates some of the complexities one might encounter; just staying up to date with the multitude of QROPS jurisdictions, opportunities and pitfalls is an enormous task, which requires the attention of a trained professional. This is another reason that you should always seek advice from a properly qualified financial advisor before making any decisions. Every jurisdiction has its own criteria to consider, but this is complicated by the interactions of the rules and regulations between these jurisdictions.
Maintaining flexibility and selecting a trustee that provides access to multiple QROPS jurisdictions and free switching between them is also, in our opinion an important an important consideration.
Download our free PwC tax guide on QROPS jurisdictions and where you should transfer your pension to maximize the tax advantages in the country you plan to retire in.
Which QROPS Jurisdiction Is Best