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Are QROPS tax rules under threat by Brexit
| Published: | 25 Apr at 6 PM |
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The news that Britain’s final exit from the European Union may well end the present situation whereby UK ex-company and private pensions can be transferred internationally is causing concern amongst finance professionals.
According to European law, British expats are able to take their pension pots out of a number of UK private pension schemes and transfer them overseas via a QROPS. Without the QROPS, the amount taken, after having been taxed at source in the UK, would also attract a tax bill in its EU destination country. The rule gives pensions savers the guarantee of harmonised tax treatment within the EU.
It’s certain that the full terms of Britain’s exit from Europe will be unclear for the foreseeable future, but experts believe QROPS are becoming vulnerable to change by the UK government. The reason is simple, in that the UK tax office would consider QROPS changes as a fast and convenient way to claim the many millions in tax revenue already slipping though its hands under the legislation as it stands today. At present a total of some nine billion sterling in pension savings has been moved overseas, with breaking down the existing arrangements in double-quick time a temptation the government may find difficult to resist.
Present-day holders of QROPs and EU employees are now being advised to keep checking their current status, as HMRC is again removing trusts. Two based in Luxembourg have been recently dumped, making those holding them vulnerable to tax bills on the basis of ‘unauthorised transfers’. Another reason to stay informed for expats who’ve worked in EU institutions for less than a decade is that the present ‘transfer out’ facility for pension savings may not be allowed post-Brexit.
Experts are also considering politicians who predict EU law will no longer apply several years from now might well be tempted to make politically attractive moves well in advance. Easy options as regards raising funds are usually related to taxation in one form or another, with many advisers now fearing governmental logic and harmonisation as regards private pension rules may be hard to find in the near future.
Source: Delano English Magazine, Luxembourg
According to European law, British expats are able to take their pension pots out of a number of UK private pension schemes and transfer them overseas via a QROPS. Without the QROPS, the amount taken, after having been taxed at source in the UK, would also attract a tax bill in its EU destination country. The rule gives pensions savers the guarantee of harmonised tax treatment within the EU.
It’s certain that the full terms of Britain’s exit from Europe will be unclear for the foreseeable future, but experts believe QROPS are becoming vulnerable to change by the UK government. The reason is simple, in that the UK tax office would consider QROPS changes as a fast and convenient way to claim the many millions in tax revenue already slipping though its hands under the legislation as it stands today. At present a total of some nine billion sterling in pension savings has been moved overseas, with breaking down the existing arrangements in double-quick time a temptation the government may find difficult to resist.
Present-day holders of QROPs and EU employees are now being advised to keep checking their current status, as HMRC is again removing trusts. Two based in Luxembourg have been recently dumped, making those holding them vulnerable to tax bills on the basis of ‘unauthorised transfers’. Another reason to stay informed for expats who’ve worked in EU institutions for less than a decade is that the present ‘transfer out’ facility for pension savings may not be allowed post-Brexit.
Experts are also considering politicians who predict EU law will no longer apply several years from now might well be tempted to make politically attractive moves well in advance. Easy options as regards raising funds are usually related to taxation in one form or another, with many advisers now fearing governmental logic and harmonisation as regards private pension rules may be hard to find in the near future.
Source: Delano English Magazine, Luxembourg
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