The news was welcomed by many Gibraltar pension fund administrators and others, who first suspended transfers of UK pensions to Gibraltar in September 2009, following concerns that clients could face possible tax penalties as a result of HMRC’s alleged concern over Gibraltar’s 0% tax on the pension income of residents over age 60.
The vote, which was unanimous in favour of the amendment, was taken late on Friday.
A spokesman for Gibraltar’s Financial Services ministry said that once the amended legislation is published in the Gazette, the government’s official bulletin of record, it will be deemed to have come into effect as of 6 April, 2006. That date, known as “A-Day”, is when qualifying recognised overseas pension schemes were first introduced, as part of a major overhaul of Britain’s pensions legislation.
Gibraltar lawmakers approved the bill without making any changes, the Gibraltar spokesman added.
Rate of 2.5%
The main feature of the amendment, which may be viewed by clicking here, is that it mandates all benefits paid by “certain imported pensions” are to be taxed at a rate of 2.5%.
The legislation also provides for a maximum commutation, or so-called pension-commencement lump sum, of no more than 30%; a minimum retirement age of 55, except "in very specific circumstances relating to chronic ill health"; and it prohibits schemes imported into Gibraltar from being transferred to another scheme outside of Gibraltar "which does not comply with the original requirements" of the Gibraltar scheme.
Some QROPS industry officials, many of whom operate out of other jurisdictions, have publicly questioned whether HMRC might not accept Gibraltar as a QROPS regime, arguing that by changing its legislation to accommodate QROPS, it was failing to comply with HMRC’s intent.
Bethell Codrington, head of international pensions at TMF, for example, which favours Malta for the transfer of QROPS, recently cited a UK government statement which said that “where the country or territory in which a QROPS is established makes legislation or otherwise creates or uses a pension scheme to provide tax advantages that are not intended to be available under the QROPS rules, the Government will act so that the relevant types of pension scheme in those countries or territories will be excluded from being QROPS”.
In an interview, he added: "To me, and I’m not a Gibraltar expert by a long shot, the question is whether Gibraltar, by introducing new legislation, is not falling foul of that [clause]. I don’t know whether it would; and at the end of the day, it’s not for me to decide."
