QROPS In Spain

QROPS in Spain – Over 70,000 UK expats are deciding to emigrate and retire to Spain annually. Taking advantage of the warm climate, sandy beaches and enjoyable culture many of the UK expats are transferring their pension into a tax efficient QROPS (Qualifying Recognised Offshore Pension Scheme).

The UK’s HMRC has only approved 13 Spanish QROPS, most of which are company run employee schemes. The main reason for there not being more Spanish QROPS is that there are few advantages to transferring your pension into a Spanish QROPS as the you will be taxed at a similar rate to the UK, except that your tax free personal allowance is around €7,000 more in Spain than in the UK and you would not incur foreign exchange costs.

To fully take advantage of moving to Spain you could transfer your UK pension into a third party jurisdiction such as Malta. In Malta there are many advantages to establishing your QROPS there including;

  1. No foreign exchange risk – Malta is a member of the European Single currency
  2. Low tax rate on your annuity – you are able to state to the Spanish authorities that you are being provided a “temporary annuity” to the Spanish tax authorities and as a consequence you will only be liable for a small proportion of your benefit to incur income tax. This figure is normally around 10%.
  3. Lower inheritance tax – In the UK you are liable to pay 40% on death, in Spain 34% and in a more tax efficient jurisdiction, like Malta you will only have to a transfer of duty of 5-10% tax.

You are looking to take around 2-3 months to transfer you UK pension into a QROPS and it is critical that you take professional advice when you do this.

For more information feel free to contact one of our qualified pension transfer experts here.

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