How does the Brexit transition period affect the QROPS overseas transfer tax?

Published:  18 Feb at 6 PM
Want to get involved? Become a Featured Expat and take our interview.
Become a Local Expert and contribute articles.
Get in touch today!
Britons planning to emigrate and use an offshore QROPs transfer for their retirement savings could be forgiven for feeling confused.

The prospect of Brexit has made expat retirement a far more complicated process than previously, especially where financial matters are concerned. However, until the end of the transition period on December 31 this year, there’s no reason to fear the hefty QROPS overseas transfer tax. The confusing nature of the charge itself is another issue, but is basically straightforward in that 25 per cent of the total amount transferred is taken as tax when shifting a UK pension to a QROPs in a non-European Economic Area country.

Technically, the UK is no longer a member of the EEA, meaning that a QROPS transfer to any third party country within the EEA should trigger the 25 per cent tax. For example, a pre- Brexit transfer by a British expat in Spain to a QROPS based in Malta would have not been subject to the tax, with this ruling still in place until December 31st,2020. In addition, new rules brought in by the UK’s HM Revenue and Customs and applicable to British expats living in EEA countries or on Gibraltar state that transfers to a Gibraltar or EEA-based QROPs will not attract the tax. In fact, Gibraltar is being treated as an anomaly due to its economic and legal relationship with the United Kingdom.

Of course, the overseas transfer charge still applies for all world countries outside the EEA. For example, a British expat retiring in Australia or Canada and transferring to a QROPS based in their country of residence will avoid the charge, whilst those transferring their pension funds to another overseas jurisdiction will be forced to pay. As with many other financial rulings, the end of the transition period is likely to see a plethora of changes in the law but, for now, expats in Europe can open a third party QROPS without losing 25 per cent of their retirement savings.
Like this news?

Comments » No published comments just yet for this article...

Feel free to have your say on this item. Go on... be the first!

Tell us Your Thoughts On This Piece:

Your Name *
Email * (not published, needs verification one time only)
  • Facebook
  • Follow us on Twitter
  • RSS feed
  • Facebook

Latest Headlines

News Links

News Archive