The relaxing lifestyle and warmer climate may contribute towards the large amounts of British expats who go to live in France, but few people consider the country a tax haven for their UK pension.
In many ways, the French tax and pension systems are more complicated and burdensome than those in the UK, but anyone living in France who has UK pension rights can transfer their fund into a QROPS – and gain significant tax benefits.
Benefits of a QROPS when retiring to France
A QROPS allows your fund to sit and grow in a low tax environment whilst you live in France.
You can be paid your pension income in the euro, so you are less vulnerable to currency fluctuations and the sterling’s poor exchange rate. And because your QROPS doesn’t have to be based in France and involves a trust, it is not effected by France’s inheritance tax regime.
This means you do not only avoid buying an annuity, but can pass on your fund to your family upon death, without paying any inheritance tax.
Which jurisdiction is best?
Transferring your fund into a French QROPS is not advisable as no providers are able to receive a UK private pension. Yet your pension can be transferred into the 40 other countries which are recognised by HMRC to operate QROPS.
Of these, Malta may prove the most effective. Its double taxation agreement with France means that you would never have to pay tax twice, and its economic stability makes it a respected centre for pension transfers.
What if I want to return to the UK?
After the transfer has been made, your QROPS provider supplies HMRC with reports on any income or payments taken from your pension every year for ten years.
After this time, there are no notable disadvantages of owning a QROPS in the UK, and in fact there are several advantages – one of the more prominent being you will only pay income tax on 90% of your income.
To discuss whether a Malta QROPS is right for you, please contact us using the tab at the top of this page.