QROPS. Dr Doran Magri Demajo

Transcription

1 QROPS Dr Doran Magri Demajo

2 A new international pension scheme launched in April It allows for non-uk tax residents who are overseas and currently hold a UK pension which is registered under her majesty s revenue and customs (HMRC) to transfer these pension assets to a qualifying recognised overseas pension schemes (QROPS). A QROPS is structured in the same manner as a UK pension there is an investment vehicle which is owned on your behalf by a pension administrator. The difference would be when the pension administrator is outside the UK, as he would have to report back to the HMRC for the first 5 years. After the first 5 years there would no need to report back to the HMRC. Moving the QROPS to a low tax jurisdiction will give one benefits from that country. It is where QROPS is based and where the person would reside that would pass on the benefits and not the UK. The scheme must be outside the UK and it must meet the strict requirements set by the HMRC. The scheme must be recognised as a pension scheme in the jurisdiction that it is in. The last list of QROPS (published 23/12/2010) lists the following with regard to Malta: Dominion Malta retirement plan expatriate Malta retirement plan MCT Malta private retirement scheme melita international retirement scheme trust STM Malta retirement plan Publication of the scheme on the HMRC site is tantamount to approval by the HMRC. At least 70% of the funds transferred must be used to provide the individual member with an income for life the 30% could be withdrawn as a lump sum. The % of the lump sum differs from one jurisdiction to another. QROPS are exempted from UK inheritance. With QROPS one can choose the currency in which it is held. 1

3 QROPS come with no requirement whatsoever to buy an annuity or any other investment product and it is generally outside the scheme holder s estate for inheritance tax purposes. QROPS fund may be inherited in full and without tax in most cases, through the scheme holder s will. A person can live in one country (outside the UK) and have QROPS in another. Retirement funds are pension pooling vehicles that may be used by local/ overseas retirement schemes for the investment of the scheme s assets. Administrators/ asset managers/ advisors/ custodians are all service providers that provide a service to licensed retirement schemes and retirement funds or the equivalent arrangement overseas. Benefits in the first 5 year period in relation to a member s UK tax relieved scheme funds, will have to meet the requirements that would apply to a UK registered pension scheme. The UK tax relieved scheme funds comprises of the amount crystallised on the transfer to the QROPS and any tax relieved contributions made to the QROPS while the member is a UK resident. Trustees can only invest in approved assets by the HMRC such and antiques and residential property (not the investor s own). Usual structure This will vary according to the jurisdiction There would be a master which appoints a corporate trustee The corporate trustee would be the QROPS provider Trustee would be based outside the UK The trustee would invest in a wide range of assets There investments would be held on behalf of the member by the trustee. The trustee has investment powers and often an investment manager is appointed to switch investments as the market conditions would change. The trustee would be responsible for making payments of benefits from the QROPS to the person. 2

4 Malta Regulated by the MFSA under the Special Funds Regulation Act Once the scheme is authorised under this act, the scheme will then apply to the HMRC to be a QROPS. The scheme manage must confirm that the scheme fulfils all the requirements. MFSA imposes a maximum of 25-30% of the pool of fund to be withdrawn by the person upon retirement as a lump sum. This should be tax free. The person may be paid benefits in the form of a combination of a lump sum and/ or by way of an annuity or a programmed withdrawal arrangement devised by the scheme. The scheme would be subject to the laws of Malta and it shall allow the person the flexibility of a scheme established outside the UK. The scheme must be created according to the Special funds regulations act by: a trust (in this case a trustee will need to be appointed to act as trustee of the scheme) a contract (to the satisfaction of MFSA) A trustee of a retirement scheme will either need to obtain a full licence or a licence which would limit the allowable activity of the trustee to administer the retirement scheme. The scheme would also need to appoint a retirement scheme administrator (may be the trustee). The trustee may appoint a third party to act in this position and outsource administration of the scheme by a written agreement. To set up in Malta Set up a retirement scheme in accordance with the special funds regulation act Abide by all the rules established by the MFSA 3

5 Once the scheme is established in Malta, an application would be done by the scheme administrator to the HMRC the scheme administrator must also confirm that the scheme fulfils the requirement for being a recognised overseas pension scheme Through the EU Directive on activities and supervision of institutes for occupational pension schemes set up in Malta already have regulatory recognition in all countries of the EEA. Pension schemes set up in Malta have access to Malta s network of double tax agreements with more than 50 countries. Why Malta Full EU and commonwealth membership Political, social and economic stability Hold a number of double tax treaties Single regulator that highly regulated and accessible Vast and fast growing financial services sector English speaking Incorporates both common and civil law 4