Malta QROPS Information

Malta QROPSMalta QROPS have a fast-growing reputation as a safe place for retirement savings in a world of financial turmoil.

That reputation is overseen by a tough regulator – the Malta Financial Services Authority (MFSA).

Despite decades of independence from Britain, Malta still not only still speaks English, but also speaks the same financial language as the government in London.

Malta is a respected self-governing state, bolstered by membership of the British Commonwealth and the European Union.

As an EU country and one of the Eurozone states, Malta has a stable economy and automatically complies with EU financial directives.

Not only does the island have a proud and brave past, but a prosperous present as a financial jurisdiction and a confident future that could make Malta the world’s leading QROPS centre.

So what are the factors that make Malta such an attractive proposition for QROPS?

Secure and reliable pensions

QROPS providers cannot just open for business in Malta. Each provider has to register with the MFSA, which examines the scheme in detail before allowing a single penny of investment by retirement savers.

The bar is set high. The MFSA has already indicated that providers trying to relocate from other financial centres that their application for QROPS status is unlikely to succeed in Malta if their scheme has been closed to new business by HM Revenue & Customs (HMRC) in London.

The tax authorities have warned that any Malta QROPS must play a straight bat and follow the rules laid down by HMRC or stay away.

Malta has decided to design a QROPS that fits HMRC legislation like a glove.

Rather than look at pushing the envelope to innovate to attract investment, like Guernsey, the Isle of Man and New Zealand, Malta has taken a more conservative approach by consulting HMRC to put together a more solid pension proposition.

Tax and Malta QROPS

Inland Revenue Malta has published guidelines for the taxing of QROPS income and payments.

The guidelines are divided in to three sections:

  • Income for a QROPS is exempt from tax, providing the income does not come from immovable property in Malta
  • Any lump-sum paid from the QROPS is tax-free but other payments are taxable
  • QROPS investors must register with Inland Revenue Malta and submit an annual tax return. The tax return should give details of any withholding tax on pension payments under the terms of bilateral double taxation treaty between Malta and another country.

To claim foreign tax credits, the QROPS investor must provide a tax residence certificate from the country where they live. If a certificate is not available, the investor must make a declaration backed by evidence of residence, like utility bills etc.

The key to Malta QROPS is understanding the island’s tax treaties – 60 are in force plus seven agreed but awaiting signature. Full list of tax treaties –

  • If a QROPS investor is tax resident in one of these 60 countries, excluding the UK, then any difference between foreign and Maltese income tax on pension payments can be reclaimed as foreign tax credits.

Countries with a bilateral treaty with Malta will receive financial information about their taxpayers who hold offshore accounts on the island.

  • If a QROPS investor is tax resident elsewhere, Malta’s tax authority may require payment of full income tax on the island without any foreign tax credit.
  • If a QROPS investor is resident in Malta, local income tax laws apply to pension payments.

Strict QROPS compliance

This combination of pension and tax compliance is what makes Malta one of the leading offshore financial centres for British expats and international workers who have accrued pension rights in the UK.

The MFSA and Inland Revenue Malta have clearly stated they plan to run a tight QROPS ship and rogue providers and investors are not welcome aboard.

Malta QROPS offer all the tax and investment benefits as any other country – but with the added security of pension regulation that meets the strictest European standards.