Will new Gibraltar QROPS undermine Guernsey negotiations

Published:  19 Feb at 6 PM
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Questions are being asked about the future of QROPS offered by Guernsey after two new QROPS were opened in Gibraltar.

Concept Group, one of the sector’s largest providers of Qualifying Recognised Overseas Pension schemes, has opened two new pensions on Gibraltar aimed at getting back into the lucrative QROPS marketplace. Concept was effectively shut out of the market in 2012 after HM Revenue and Customs (HMRC) excluded 300 of its Guernsey-based offerings.

The new QROPS are being marketed via Concept’s Aurora offshore pensions brand, and are the result of the company’s two-year efforts to claw its way back into the market, even although its funds under management on Guernsey are reported as totalling around £600 million. At the smae time, Guernsey finance and tax officials are negotiating with HMRC to find a way to reopen the island’s offshore pensions market.

Experts suspect that Concept’s move to Gibraltar is a sign that negotiations may be proving less than successful for Guernsey’s financial industry, with some suggesting investors shouldn’t hold their breath over a resurgence of Guernsey QROPS. Concept’s relocation will have cost time and a great deal of money as well as expertise, and the company will not wish to spread its efforts across two jurisdictions.

The initial problem faced by Guernsey was that QROPS tax rules varied between residents and non-residents, forcing the HRMC to pull the plug and remove the product’s status. Gibraltar’s initial problems were similar, but it took the initiative and halted all pension transfers two years before HMRC stepped in and suspended the Rock’s QROPS.

Once the issue was resolved due to legislation clearing the tax obstacle, Gibraltar's QROPS market hit a boom, with 23 being introduced in 2013. A Concept spokesperson said that the choice of Gibraltar was determined by the simple 2.5 per cent tax rate on all pension incomes as well as the Rock’s status as an EU member state.
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