Offshore QROPS The Guernsey Position

Posted: 11 December 2008

Guernsey has introduced restrictions on Guernsey-based QROPS following discussions between Guernsey tax authorities and Her Majesty’s Revenue & Customs (HMRC).

One of the main restrictions includes a restriction on lump sum payments - to 25 per cent of the pension fund - applicable to both residents and non-residents of Guernsey.

 

However, possibly the most significant restriction is on any onward transfer from a Guernsey QROPS, of funds originated from a UK approved pension fund, made to a scheme outside of Guernsey.  It is understood that a transfer, of this nature, can only be made to another registered QROPS that restricts the tax free cash entitlement to 25% of the fund.

 

As Offshore QROPS understands, these rules have been put in place so Guernsey is not seen as a jurisdiction where an individual can use the Guernsey QROPS schemes to transfer their UK pension funds and then either directly (or indirectly) take 100% tax free cash from it after 5 years of overseas residency.

 

At the moment, Guernsey is the only jurisdiction that is taking this stance. However, it will be interesting to see if any other countries or territories adopt a similar position.  



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