Qualified Recognised Overseas Pension Scheme

What is a QROPS?

A Qualified Recognised Overseas Pension Scheme, or QROPS, is an overseas pension scheme that is run by a trustee(s) outside of the UK.

A QROPS can receive tax-free transfers from UK registered pension funds. They were first introduced to simplify moving UK pension savings abroad for those who choose to permanently relocate.

Is a QROPS regulated?

A QROPS is recognised by HMRC and allows UK Pension Benefits to be transferred into them. For a QROPS to become ‘qualified’ it must meet the criteria set by HMRC.

All UK pensions including a QROPS are regulated by the Financial Conduct Authority (FCA). Once a pension is transferred into a QROPS and a period of time has elapsed, your pension is regulated by the governing body of the jurisdiction that the QROPS resides in.

Why use a QROPS?

Transferring a UK pension to a QROPS can offer flexibility, tax and currency benefits.

A key advantage of transferring to a QROPS is your pension is not subject to UK rules and tax laws. Unlike a Self-Invested Personal Pension (SIPP) a QROPS can be held in a jurisdiction outside of the UK that is tax advantageous. This is why a QROPS is usually held in jurisdictions such as Gibraltar.

Under certain circumstances, it is possible to withdraw a tax-free lump sum if you are a Cyprus resident. If this is not possible, QROPS withdrawals and UK pension income(s) would be taxable in one of two possible ways:

A flat rate of 5% tax with a €3,430 allowance
Added to your annual income, charged at the relevant rate for your income tax scale (you pay 0% for an income under €19,501 but for an income above that threshold, the tax scale ranges from 20% to 35%).

If you are considering a QROPS be aware, other pension schemes offer a guaranteed minimum pension and other benefits that are built into the final salary scheme. These benefits are not transferable to a QROPS, only the actual value is. However, if you transfer into a QROPS, your pension is protected from exchange rate fluctuations as it will be paid in the local currency.

Talk to us about QROPS

From our blog

Filing Your Personal Income Tax Return In Cyprus

Have you filed your income tax return yet? If you are a tax resident in Cyprus, read our blog to learn what you need to know.

Holborn deploys care packages to Cyprus wildfire victims

At Holborn, we are committed to giving back to the local communities we serve. To aid victims of the wildfires, our Cyprus teams have been deploying care packages to those who need them most

Using your UK driving licence in Cyprus

Many UK expats wonder if they can still use their UK driving licence in Cyprus. Our comprehensive guide will answer all your questions.

Healthcare guide for expats in Cyprus

If you plan to move to Cyprus, healthcare coverage is an important factor that you should take into consideration. Read our guide to learn more.

QROPS