10 Aug Some Facts about QROPS Pension Transfer
A QROPS is a type of overseas pension transfer scheme that follows requirements set by HMRC (Her Majesty’s Revenue and Customs). A QROPS is a Qualifying Recognised Overseas Pension Scheme that requires a beneficial owner along with a set of trustees. Once set up, it can be used to receive pension benefit transfers. Originally a part of the UK legislation of 2006 (6th April), QROPS was a direct result of the EU freedom of capital movement’s human rights requirements.
A QROPS shouldn’t incur any unauthorised payment or scheme sanction charge. . A QROPS UK pension transfer is an ideal option for UK citizens leaving the UK to permanently emigrate or retire abroad after having built up a pension fund in the UK. Alternatively, an individual born outside of the UK that has built up benefits through a UK-based or registered pension scheme may move their pension to an offshore scheme through QROPS UK pension transfer. Conversely, UK state pensions cannot be transferred, although other types of pensions like defined contribution, defined benefit schemes, SSAS, and SIPPs are allowed for transfer abroad.
Taxation is a critical consideration when deciding how QROPS should be taxed not just internally but also upon pay-out. Pension taxation can be impacted by factors such as whether the country of residence of the scheme’s beneficial owner recognises contracts or trusts based on pensions. For instance, Spain and France apply tax upon receipt of benefits such as a tax-free lump sum.