A big problem for USA residents who want to transfer their UK pension retirement funds in to a QROPS (Qualifying Recognised Overseas Pension Scheme) is US laws do not recognise any British pensions.
As a result, US residents must report the funds to the Internal Revenue Service and may have a liability to pay tax on fund growth and any income from the fund.
That creates a problem for three groups who would likely want a QROPS:
- US citizens with UK pension rights
- Non US citizens with UK pension rights who live in the USA
- Non US citizens with UK pension rights who want to emigrate to USA
The last two groups cover British expats and international workers who have lived and worked in Britain.
Malta QROPS Advantages
However a Malta QROPS offers a simple solution to the problem.
Although Britain and Malta both have tax treaties with the USA, they are worded differently.
Malta’s tax treaty includes a section about regulated pensions on the island – and that includes QROPS.
The US accepts Malta QROPS and other pensions as compliant with tax rules, so they do not have to be reported to the IRS and no taxes on income from the pension of capital gains are called for by the IRS.
That gives a Malta QROPS a big advantage over a UK pension scheme and QROPS offered by many other financial jurisdictions that have not carefully worded tax agreements to cover pensions with the IRS.
Malta QROPS for USA Residents and Citizens
The unique treaty gives USA residents and citizens the chance to benefit from the flexible investment and effective tax features that a Malta based QROPS can offer:
Malta is an established financial jurisdiction that is regulated under European Union rules and the local Malta Financial Services Authority.
Providers on the island offer a range of QROPS – including lite products for smaller funds with reduced administration and set up costs. However not all schemes are equal and careful financial planning is required.
If you are a USA residents or citizen, a UK pension transfer can be complex and professional advice is required. Contact us to find out more about transferring your pension to a Malta based QROPS and how we can help