Taking advantage of QROPS as a British expatriate

Learn about QROPS for British expatriates

Presently over 5.5 million Britons are working in foreign countries, and based upon historical data, possibly 40% of those will retire outside the UK as well. The explanations for that might be unique for each and every person, but the most common reason is the lower living costs abroad in comparison to the UK. In this article, we explore the advantage of QROPS.

Across many nations worldwide, specifically in Eastern Europe and Asia, living costs are approximately 50% less than the UK. State and occupational pensions will expand a whole lot more abroad in terms of purchasing, including food and property.


As the quantity of those who would like to retire overseas is consistently increasing there comes some fair question: “As I am not using any of the services throughout the United Kingdom anymore and I have got paid my dues, why would I continue to pay high UK taxes?”

Luckily, changes in the pension regulations imply that you could now avoid UK taxes on your present UK pension plans by moving them overseas. These pension transfers are known as QROPS – “Qualifying Recognised Overseas Pension Schemes.”

Simply put, QROPS would allow you to take advantage of the sunny weather and much healthier life-style abroad without having to pay inheritance, dividend, or income taxes in the UK.

Exactly what are QROPS?

The QROPS program was introduced on April 6th, 2006, as a part of brand-new guidelines along with the purpose of simplifying pensions. As its name points out, those are tax-effective pensions for British expats or international workers with UK pension rights, who may have chosen to live beyond the UK entirely.

QROPS are frequently referred to as ‘offshore’ pensions, as the companies work from financial centers outside Britain, rather than ‘onshore’ pensions, which can be UK based.

By the moment there are near 3000 schemes available in 45 countries around the World. 
Her Majesty’s Revenue and Customs (HMRC) released a summary of providers, which pension schemes, meet QROPS guidelines. Just those schemes within this list are considered to be QROPS. However merely because a scheme is listed does not always mean HMRC has advised that particular scheme. You could obtain the newest copy of the list through the HMRC website.

A QROPS can be held in any jurisdiction that is HMRC approved and follows the QROPS rules. In general, the most reliable jurisdictions which have been running the longest and have the greatest number of members are Guernsey & the Isle of Man, though there are numerous other schemes in other areas. Each jurisdiction features its own distinctive tax rewards and guidelines.

What are the advantages to move your pension to QROPS?

QROPS present some important advantages compared to any other form of pension scheme. Here are a few of them:

  • Stay away from the UK’s 55% death tax
  • Merge retirement benefits into one easy to control fund
  • Superior investment flexibilityRetirement age of 55
  • Protect against any further UK tax and regulation changes
  • The currency of your choosing
  • You can keep your pension in Pounds Sterling or change it to the currency of the country you are moving to. For example, if you devise, you will be living in Spain, you can change all your pension pot.
  • On the other hand, if you think the Pound will remain stronger, you could keep your pension in GBP and benefit from the exchange rate at some later date.

Actually, you may keep your pension in different currencies if you wish, GBP, USD, EUR, and SEK, for instance.

QROPS Jurisdictions

Qualifying Recognized Overseas Pension Schemes (QROPS) are not destined in every single region. For example, if you live in Marocco, there aren’t any QROPS jurisdictions there and for your financial safety, you don’t want to move your pension in that country. In that case, it would be better to transfer your pension to Malta for instance, which is part of the European Union and additionally has a double taxation agreement. That means for expat in Malta, pension would be paid out gross avoiding all the taxes.

Here is a list of all the QROPS jurisdictions with double taxation:

Isle Of Man

The Isle of Man is considered the most popular QROPS jurisdiction for the last year – 2013. This QROPS allows significantly greater pension income to be paid out over time, which is the main reason why it is so popular among the British expats.

Nonetheless, a 20% income tax is enforced at source in the Isle of Man, if you reside within a country, without a Double Taxation Agreement (DTA) with the Isle of Man. The Isle of Man additionally has a 7.5% tax upon death, which will be deducted at source in the Isle of Man.


QROPS Gibraltar is another famous QROPS jurisdiction for British expatriates. The Gibraltar QROPS avoids all UK taxes and imposes a 2.5% flat rate on income at source in Gibraltar. Another advantage is that the tax upon death is not due. In fact, Gibraltar QROPS is the preferred jurisdiction if you still don’t know or haven’t decided yet in which country you will end up retiring. That is because any country can be used with a QROPS in Gibraltar. No matter where you live all you need to pay is these 2.5% income tax at the source mentioned above. It is then up to you to declare any income in the country you retire and therefore pay income tax in that country.


QROPS Malta is the third most popular QROPS jurisdiction for 2013 right after the Isle of Man and Gibraltar.

This QROPS destination is the best choice for those who wish to retire in some European country. Malta is a member of the European Union and has 65 Double taxation agreements with various countries around the world. For the biggest part of these countries, your QROPS should be paid in gross, free of tax in Malta, however, it does depend on the specific agreements.

For instance, if the country you are residing doesn’t have a DTA with Malta, you will be required to pay tax which varies from 15% to 35% on any income deducted at source in Malta.

Who your pension can be transferred to QROPS

Unfortunately, you can’t make a QROPS transfer by yourself as the QROPS providers only deal with pension transfers on behalf of approved intermediaries. 
The whole process typically takes 2-3 months on average. Here are the usual steps:

You or your financial and/or tax adviser need to contact the UK pension scheme to confirm whether your UK pension benefit can be transferred. If your benefit can be transferred, request the UK pension scheme to send you the paperwork required to initiate your UK pension benefit transfer. You or your financial advisor has to contact the UK pension scheme to confirm where your UK pension benefit can be transferred. Upon confirmation, the paperwork will be sent to initiate the transfer of your UK pension benefit.
Once the payment from your UK pension fund to your overseas fund has been completed, you should receive a confirmation notice.
The fund would apply the money to your bank account.

In summary, there is if you are decided to retire abroad you should consider moving your pension. You can legally avoid paying those high UK taxes, and it is within your right to do so.

It is said that your retirement is the holiday of your life so saving on unnecessary fees should definitely contribute to that experience.

Author: ExpatInfoDesk