Gibraltar has travelled a rocky road to sort out recognition to run QROPS pensions from the UK tax man.
For several months, Gibraltar’s QROPS providers self-imposed a pension transfer ban as HM Revenue and Customs threatened to withdraw their QROPS status because the terms and conditions of their pension schemes allegedly failed QROPS legislation compliance tests.
HMRC claimed the Gibraltar 0% income tax rate on pension payments was not really a tax, but merely a sop to meet compliance.
Gibraltar pension providers claimed that the nil rate was a tax but after months of huffing and puffing with HMRC, the government agreed to amend the state’s tax legislation to meet QROPS rules.
This has allowed QROPS providers to lift their ban and start trading.
Any QROPS transfer to Gibraltar now meets HMRC’s rules.
Gibraltar offers a low tax offshore financial centre
Throughout the disagreement, Gibraltar retained QROPS status and remained on the QROPS list.
Gibraltar is an attractive offshore financial centre with British expats because of historical ties, a common language, low tax and a stable government.
Many expats retire to Gibraltar for these reasons despite political difficulties with neighbouring Spain.
QROPS pensions can set up in Gibraltar to take advantage of the low tax environment, but like any other QROPS, the rules allow them to live wherever they want in the world.
Gibraltar QROPS offer all the advantages of other QROPS, like a 25% tax free cash lump sum, flexible investment opportunities and no obligation to purchase an annuity. or alternatively secured pension (ASP).
Income tax on Gibraltar QROPS pension benefits depends on where the person receiving the cash lives and their nationality.
Gibraltar QROPS pay out gross benefits in several major currencies, like Euros and US dollars.
Although the 25% lump sum is tax free, regular pension benefits are subject to income tax at the usual rates in the country where the scheme holder is resident.
Gibraltar tax rates rival other offshore QROPS
Tax rates on fund growth are competitive with rival offshore financial centres like the Isle of Man and Guernsey.
Contact QROPS.net to be put in contact with an independent, regulated financial firm to find out more about Gibraltar QROPS.