QROPS Rules – There are many rules and regulations which govern transferring your pension into a QROPS when you decide to retire/move to Spain. These include;
Before deciding on transferring into a QROPS you must ask a number of questions;
- You must intend to be live outside of the UK in Spain or another country for 10 years or more
- You have not yet taken an annuity from your UK pension.
- You hold existing UK pension/s
- The QROPS that you are looking to transfer your pension into is taxed and regulated in the jurisdiction in which it’s registered.
- The QROPS an HMRC approved scheme? Check here for more information; http://www.hmrc.gov.uk/PENSIONSCHEMES/qrops.pdf
If you are resident in Spain, your UK state pension and any occupational pension income will be taxable only in Spain and not in the UK, under the terms of the UK-Spain Double Taxation Treaty. UK Government Service Pensions will remain taxable in the UK and will not be taxed in Spain.
There is a small personal allowance for any income received in Spain which is non-taxable. For 2012, this is €17,707 against approximately €10,000 in the UK. Tax rates on income are approximately the same in both the UK and Spain, however if you held your QROPS in a country outside of Spain, for example either the Isle of Man or preferably Malta you would incur even less tax (around 10%). The Isle of Man does not hold a double taxation agreement with Spain so you are likely to be taxed twice – once in the Isle of Man and once in Spain.
If you require further information surrounding the rules behind transferring your pension into a QROPS please don’t hesitate to get in touch with one of our QROPS specialists here.