HM Revenue & Customs (HMRC) has confirmed that pension schemes established in Malta and regulated by the Malta Financial Services Authority (MFSA) may be considered on a case by case basis to be eligible for the status of Qualifying Recognised Overseas Pension Schemes (QROPS) under UK Law. This recognition is based on the current legislation in both Malta and the UK.
A QROPS is a pension scheme set up and regulated outside the UK and which is recognised by HMRC as broadly equivalent to a UK Registered Pension Scheme. QROPS therefore allow persons who are no longer resident in the UK to transfer pension benefits accumulated in a UK Recognised Pension Scheme to a recognised pension scheme situated outside the UK. This can give many employers and their employees more tax flexibility on these benefits, provided certain requirements are met. The same advantages apply to individuals who are no longer resident in the UK who receive benefits from their personal pension schemes.
The MFSA is currently processing a number of applications for the registration of retirement schemes under the Special Funds (Regulation) Act. Once authorised under this Act, pension schemes interested in doing so may apply to the HMRC to be a QROPS. As part of this process the scheme manager must also confirm that the scheme fulfils the requirements for being a “recognised overseas pension scheme”.
QROPS recognition came following discussions between HMRC, the Maltese Inland Revenue and the MFSA over the past months. The MFSA said that this is a significant development for Malta indicating that the strong reputation of the Maltese financial services industry coupled with the fact that Malta is an English speaking country, had already generated a lot of interest in this area. Through the EU Directive on the Activities and Supervision of Institutions for Occupational Retirement Provision (IORPS), occupational pension schemes set up in Malta already have regulatory recognition in all countries of the European Economic Area (EEA). The new developments are also significant because pension schemes set up in Malta have access to Malta’s network of Double Tax Agreements with more than fifty countries.
Additional information on establishing Pension Schemes in Malta may be found under the Pensions Section on the MFSA website: www.mfsa.mt - “Pensions”. Further information on making QROPs notifications to the HMRC is available on the latter’s website: http://www.hmrc.gov.uk/MANUALS/RPSMMANUAL/RPSM14101050.htm