QROPS have always been more complex for residents of the US in comparison with the situation for those located in other destinations across Europe and the world. The strict regulations imposed by the IRS effectively negate many of the advantages a British pension would usually benefit from via a transfer into an overseas pension scheme.
Previously, if a QROPS was selected with one of the providers operating the schemes from the US, the incoming funds would need to be reported to the IRS, and the pension holder may be liable to pay US tax on growth and income derived from the pension. As a result, there were only very specific cases whereby a US-based QROPS would be recommended.
If the pension holder was s a US citizen returning to America, but with a pension in the UK, FATCA also negated many of the potential benefits for which QROPS were commonly known, although the flexibility in terms of investment and consolidation options still made QROPS a solid choice with those US passports holders with very specific sets of circumstances.
If the pension holder was British or from any other destination, having elected to live, work or retire in the US, Malta was the destination of choice for a QROPS transfer, due to the wording of its Double Taxation Agreement with the US.
However, the QROPS market, forever a contentious subject for HM Revenue and Customs, changed in March 2017. The government introduced a new pension regulation that stipulates all overseas pension transfers will now be subject to a 25% tax charge, unless transferred to the destination in which the pension holder permanently resides.
So, for example, a Maltese-based QROPS would only be appropriate for someone residing in Malta, and in the US, the only option is for a US-based QROPS. As a result, unless the pension to be transferred is worth a substantial amount, advisers now suggest SIPPs as the better option for residents of the United States.
Other Specific Country QROPS Information
Follow the links below to find out more about the specific country a QROPS is based in or being a resident in that country with a QROPS.