Italian residents who were advised to transfer their UK pension rights to a QROPS (Qualifying Recognized Overseas Pension Scheme) should review the cost and sustainability of these arrangements
For many years, offshore financial sales people have been pushing Italian residents to transfer out of their UK personal and company pension schemes to overseas arrangements with seemingly attractive claims such as being free of UK rules and no longer subject to tax. These kinds of claims are not only inaccurate, they are also dangerously misleading.
HM Revenue and Customs starting point is that it doesn’t want pension funds which have enjoyed UK tax benefits to be transferred to overseas schemes which don’t have similar restrictions to the UK. As an Italian resident it is essential to get advice from a specialist directly regulated local firm such as Unity Financial Partners.
Since 9 March 2017 an overseas transfer charge applies to certain transfers from a registered pension scheme to a QROPS. Details of the overseas transfer charge guidance can be found here https://www.gov.uk/government/publications/qualifying-recognised-overseas-pension-schemes-charge-on-transfers/the-overseas-transfer-charge-guidance
The transfer charge of 25% can apply for up to five full tax years if the member moves outside of the European Economic Area (EEA).
We have discovered that in many cases, Italian residents are paying excessive fees, charges and commissions to offshore firms and providers which are eating up the value of their pension.
Some Italian residents have even been told that they do not need to pay tax in Italy when they take out income here.
A QROPS can be a good choice for an Italian resident particularly for larger funds provided the portfolio is set up correctly and the right initial and ongoing advice is provided.
In many cases, a transfer out of QROPS to a less expensive UK based structure can work very well for an Italian resident, particularly if a move back to the UK or overseas may occur in the future.
Many of our client are qualified financial professionals who have been resident in Italy for many years and appreciate our ability to provide simple and clear solutions in an environment where transparency can often be lacking.
To arrange a review of your existing QROPS and look at how you can reduce costs and increase performance, contact us to book a meeting. Please also forward this article to friends and colleagues who may find this valuable
To make sure your existing portfolio is structured to be cost effective, tax efficient and compliant with your residence in Italy, please contact us by email to [email protected] to arrange a review.
