QROPS Jurisdictions

Where should I base my QROPS?

The jurisdiction of a QROPS refers to the country in which the scheme is based, and the choice of jurisdiction is an extremely important one for anyone considering transferring their pension plan into a QROPS.

winter-beachThis is because when a QROPS is started the benefits derive from the fact that the scheme is administered according to the legislation in the territory where the fund is based, and this differs from jurisdiction to jurisdiction.

In addition, all three enjoy financial stability and favourable tax treatment, but each of these locations has slightly different regulations which will make one or another more attractive to each QROPS holder.

Another important factor to take into account in choosing a QROPS jurisdiction, apart from the preferences of the individual, concerns the regulations in each pensioner’s country of residence, and for those living in Spain the most popular choice at the moment is Malta. This is partly because the pension benefits are paid gross (i.e. with no tax deduction) to those living in Spain, and the Spanish authorities then apply very lenient treatment to QROPS income benefits.

In one sense Gibraltar is an even better option, since the 2.5% tax at source can be offset against the taxes levied in Spain, but most advisers in this country are uncomfortable about recommending Gibraltar-based QROPS schemes on account of the political tension between the British Overseas Territory and Spain.

In addition, QROPS based in Malta allow benefits to be drawn from the age of 50, whereas those located elsewhere impose a minimum age of 55, and the former British colony’s numerous double taxation agreements with other countries means that a QROPS there can easily continue to be drawn if pensioners later decide to move from Spain to another country.

Jurisdictions outside the EU are generally considered to be at greater risk of being restricted by future HMRC stipulations.

So, for UK and Irish expats living in Spain, Malta is generally the QROPS jurisdiction of choice, but each person’s needs are different and this may not always be the case. Furthermore, it is important to choose the right QROPS provider in Malta, and in this matter professional advice is indispensable.

This is the situation as it stands at the moment, but the best advice is constantly subject to change as new legislation could be passed at any time in the UK, in the territory of jurisdiction or in Spain, and this could alter the advice given. For example, it is proposed in the UK that as of 2015 it will be possible to withdraw the whole amount of a pension fund as a lump sum, and this is likely to be mirrored in QROPS: how this will affect those in Spain and the different jurisdictions will have to be assessed when it comes into effect.

These are complicated issues, and on the question of choice of jurisdiction it is essential to seek professional, informed advice.

Further information about QROPS:

History of QROPS, why were QROPS created?

Benefits of taking out a QROPS for ex-pat residents

The most frequently asked questions in reference to QROPS

How long does it take to set up a QROPS

What are QROPS?

QROPS jurisdictions. Where can QROPS be based?

Talk to us about your QROPS needs

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The most popular locations

Currently the most popular locations for QROPS scheme are Malta, Gibraltar and the Isle of Man, where pension fund regulations are sufficiently similar to those in the UK for the schemes to be acceptable to HMRC.

Spanish Jurisdiction?

It is possible to find government-recognized QROPS schemes in Spain itself, but as Spain doesn’t recognize trust law most specialists strongly recommend against choosing Spanish jurisdiction due to the negative taxation implications, although of course, ex-pat residents living in Spain can base their QROPS in one of the other base countries.