In his Spring Budget 2017, UK Chancellor of the Exchequer Philip Hammond announced a significant shift in rules, causing transfers to QROPS requested on or after 9 March 2017 to be taxable unless, from the point of transfer, both the individual and the pension savings are in the same country, both also being within the EU or the European Economic Area (EEA).
Failure to qualify under such criteria causes a 25% tax charge to be levied on the transfer which is deducted before the transfer by the scheme administrator or scheme manager of the pension scheme making the transfer.
MARSP stated that this was an immediate measure, pointing that it is probably intended to counter abuse the tax relief given on contributions to UK pension schemes and to help clamp down on fraud, scams and so called “pension release”. It also added that the imposition of a tax charge when transferring UK tax relieved pension funds from the UK to a non-European jurisdiction, or country of residence, should discourage the transfer of smaller pension pots and help prevent pension fraud.
Nevertheless, Brexit’s impact can still have unexpected repercussions in conjunction with the new rules, especially in relation to the question as to whether UK tax relieved pension funds are still portable in Europe even after the final cut off date.
In light of these new developments, MARSP noted that the highly-regulated and monitored pensions industry in Malta remains very much open for business. Its members have expressed confidence in the future and the support of the regulator and the transparent Maltese tax regime. Malta, being a full member of the European Union, can only be strengthened by this move.
Created in 2011, following the establishment of a number of pensions scheme administrators and trustees in Malta, initially focusing on the international pensions market, with an emphasis on British expatriates, MARSP now has over 15 members whose businesses cover QROPS, international pensions and the local Maltese pensions market representing substantial assets under management. MARSP is primarily concerned with regulation, taxation and industry best practice. MARSP meets regularly, on a bi-monthly basis. Its key sub-committees regularly liaise with and lobby the Maltese Regulators (Malta Financial Services Authority) and the Maltese Inland Revenue. In addition, meetings cover general topics of industry best practice and new local and international legislation.
1QROPS is an Occupational Pension Scheme provided by the individual’s employer.