It will also be able to be used by Americans who may have built up UK pensions while posted in Britain by employers, and who may be moving on to another non-US country for work or to retire, according to James Barber-Lomax, new business team adviser at Dominion.
Malta’s financial services regulator is in the final states of approving the new Dominion EU Retirement (US Qualifying) Plan, as it is called, Barber-Lomax said. A number of clients have committed to transferring pensions into it, he added.
News of the new Dominion scheme comes as a number of other pension fund administrators have also begun pulling the wraps off their own “IRS-friendly” schemes, as reported here last month.
The trend also comes in the wake of a double-tax agreement between the US and Malta that took effect on 1 Jan, and after changes in UK tax regulations have made other financial planning tools less attractive in comparison to a well-constructed QROPS.
The new Dominion plan has been constructed so the US authorities regard it as a US qualifying pension fund – under “Article 18 of the US/Malta tax treaty”, according to Dominion – and therefore income and gains realised by plan members’ portfolios are not subject to US tax.
Also, because the plan will only allow members to join who are green card holders or US citizens, it will not be subject to US withholding tax on US source income and gains.
The plan is also not subject to tax in Malta or any other jurisdiction, and relies on the US/Malta treaty rather than on underlying insurance policies to confer advantages to plan members, according to Barber-Lomax.
“It should, in almost all circumstances, present significant tax and other advantages to members of UK [-domiciled] pension schemes and/or QROPS located in other jurisdictions, who have a US tax-filing requirement,” he added.
More than 800,000 Britons are said to live in the US, with sunny Florida and California their preferred destinations. Sun isn’t the only attraction: The top rate of federal income tax in the US is 35%, compared with 50% in the UK.
