Malta is fast becoming an increasingly popular choice for offshore investors, retirees and any British expat looking to optimise their finances via a QROPS (Qualified Recognised Overseas Pension). The island has seen increased investment activity since April, when HMRC amended QROPS legislation in such a way that effectively forced providers to move from Guernsey, Jersey and the Isle of Man to Malta.
Whilst Malta-based QROPS are increasing, Guernsey has seen three hundred of its investment schemes rendered redundant with the same tax legislation rates for residents and non-residents. Once renowned as a heavyweight hub for overseas pensions, Guernsey now offers just ten percent of the schemes that once proved specifically beneficial for expats.
An HMRC spokesperson gave further insight into their reasoning: “QROPS are intended to be the equivalent of UK registered pension schemes, the normal tax favoured pension schemes established in other countries. It was never intended that those transferring their UK pension savings should gain tax advantages that were not available in the UK.”
But Malta-based QROPS offer British Expats tax advantages for; capital gains tax, less than 55% ‘death tax’, state benefits, dividends tax and a maximum of 45% income tax and inheritance tax. Malta also offers security, flexible currency options, the opportunity to increase returns via other funding and a 100% QROPS payout to your family upon your death.
A double taxation agreement exists between Malta and sixty other countries, meaning that gross pension funds will be paid out before tax levels lower than those in the UK are paid within your country of residence at the time of drawdown. Experts warn that residents living beyond those sixty countries may be subject to withholding tax of up to 35%.
Now, Malta’s financial sector is outgrowing all others and is no longer classified as a tax haven after extensive reformation lead to numerous agreements between the Organisation for Economic Co-operation and Development and the Maltese Financial Services Authority (MFSA).