Gibraltar set to resolve QROPS deadlock

The UK Treasury and Gibraltar have at last resolved the pension tax issues that caused Gibraltar pension fund administrators to voluntarily suspend pension transfers from the UK, beginning in September 2009, International Adviser understands.

Sources close to the discussions said that the necessary amendments to Gibraltar’s pensions legislation are expected to be in place before the end of the year, following high-level talks in London that took place in early October between Gibraltar government and UK Treasury officials.

Gibraltar officials declined to comment on the reports.

If true – and there was a false alarm in January – the resolution of the tax issue will mean the end of a frustrating 14-month period for trustees of Gibraltar QROPS, and their clients.

The wait has been particularly difficult for Gibraltar pension administrators because their period of voluntary removal from the QROPS market has coincided with the emergence of a new rival jurisdiction, Malta, which – like Gibraltar – counts among its competitive advantages its EU membership and the fact that it is English speaking.

HMRC first recognised Malta as a jurisdiction to which UK pensions could be transferred at the end of November 2009. Its website now lists four Maltese QROPS schemes, administered by such companies as Custom House Global Funds Services, compared with 10 Gibraltar schemes, of which three are STM Fidecs plans and two bear the name Victor Chandler International, a Gibraltar-based online betting organisation.

Under UK pensions law, in order for HMRC to recognise a jurisdiction as suitable for UK pension transfers, it must meet one of three criteria, of which one is simply to be an EU member state. Gibraltar is not a full member but meets three of four basic conditions of membership, and is considered a member for most purposes as a result of its relationship with the UK, of which it is officially considered an ‘overseas territory’.

As reported, Gibraltar QROPS moved to suspend pension transfers from the UK after reports that HM Revenue & Customs had concerns about Gibraltar’s tax regime for retirement income.

Gibraltar taxes the pension income of people over 60 at 0%, and it is this provision that is the focus of HMRC’s concern. HMRC is said to regard a 0% tax as inconsistent with QROPS regulations
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