What do you do when your QROPS hosting country changes its laws in a way that adversely affects you? The answer is simple: jump ship to another jurisdiction that suits your needs better.
Among the countries that have been approved to host QROPS, there are a few “favourites” that appear time and time again in the list of most popular host countries. Low tax regimes, coupled with mature, well regulated investment communities are an ideal combination.
However, from a non resident’s perspective it’s often easy to forget that the country that hosts your QROPS is interested in your money too. And in today’s challenging economic climate, governments of QROPS host countries can come under political pressure to raise taxes from your pension fund for the benefit of the people who live there.
This is exactly what has happened on the Isle of Man. Historically celebrated as a low tax haven for non residents, the Isle of Man’sTreasury Minister Allan Bell MHK presented a budget to the Tynwald recently that has disappointed overseas investors. Among other measures, the personal allowance for income tax that used to be afforded to non residents has been withdrawn. The basic rate of income tax has remained the same, but the higher rate has increased from 18% to 20%. Given that the budget was introduced as the first step in a series of actions he felt necessary to shore up the island’s economy, some fear that this is the thin end of the wedge.
When you purchase a QROPS, the focus of your advisers is usually on the current situation. Transferring your fund into a certain country can be presented as a “once and for all” decision. But this is not necessarily the case. Depending on the rules of the scheme you have joined, it may be possible to transfer your money or assets to a fund in a jurisdiction that is more favourable.
Non resident investors in Guernsey, for example, still benefit from very favourable tax treatment. Accordingly, it could be worth seeking advice about transferring your fund to a scheme hosted by this Channel Island. QROPS.net can put you in contact with an adviser who specialises in Guernsey QROPS, and therefore could mitigate the effects of the Isle of Man budget. There is never any guarantee that a country will not change its tax rules. However, a good adviser will have their finger on the pulse, and be able to direct you about the steps to take to move your fund, if necessary.
