Following consultations with the Gibraltar Association of Pension Fund Administrators (GAPFA) and HM Revenue & Customs, the Gibraltar Government is in the process of amending its income tax legislation to enable QNUPS structures to be set up for the first time in the British overseas territory, according to an announcement released today.
The work on the amendment is expected to be completed "in a matter of days", and will be followed by a six-week consultation period, with the result that transfers into Gibraltar QNUPS could "in theory" begin to take place as soon as the end of April, a Gibraltar Government source said.
"The changes [to the tax legislation] are likely to be very minimal, but for the avoidance of doubt the wording will make it clear that qualifying non-UK pension schemes are covered by the act," he added, when asked why QNUPS could not be set up under the existing legislation for qualifying recognised overseas pension schemes.
As the name suggests, QNUPS cannot take UK pensions, but are able to take onboard and look after a wide range of assets, such as property. And, like their close relation, the QROP scheme, QNUPS can enable individuals to benefit from certain tax advantages, such as, in the case of QNUPS, exemption from UK inheritance tax on the member’s death.
QNUPS were introduced in 2010 but made retroactive to “A Day”, in April 2006. That was when the UK overhauled its oversight of pensions, in an effort to simplify them.
It was also at this point that the UK made it possible for people to move their pensions abroad if they had lived outside the UK for five or more full tax years and had no plans to return, in order to comply with then-new European Union legislation which mandated that people be able to move their UK pensions elsewhere within the EU.
Albert Isola, Gibraltar’s minister for financial services, said the news that Gibraltar’s pensions industry would now be able to handle QNUPS was “good news” and that it “builds on the success of our QROPS business established over the past 18 months.”
Ian Le Breton, managing director of Sovereign Group’s Gibraltar office, agreed, noting that QNUPS were available not only to Brits who have left the UK and do not plan to return, but also for those who have never left and do not plan to. "We are planning to add Gibraltar QNUPS to our existing Guernsey and Malta [QNUPS range]," he said.
QROPS jurisdiction status
As reported, Gibraltar regained its status as a QROPS jurisdiction in 2012, after the Gibraltar Parliament approved amendments to its income tax legislation that satisfied certain concerns of Britain’s tax authorities that had led Gibraltar’s pension fund administrators to suspended transfers of UK pensions to Gibraltar in September 2009.
HMRC had been understood to have had issues with Gibraltar’s 0% tax on the pension income of residents over age 60.
This was resolved by changes to Gibraltar's pension law which mandated, among other things, that all benefits paid by “certain imported pensions” be taxed at a rate of 2.5%.
According to today’s statement, the plan being proposed by Gibraltar would make Gibraltar QNUPS also subject to a tax rate of 2.5%.
Ashton, Licudi cited
In today's statement, Isola credited Gibraltar Finance senior executive Michael Ashton and his own predecessor as financial services minister, Gilbert Licudi, for making the QNUPS facility a near reality, and cited Licudi’s work in 2012 on “the earlier QROPS initiative” for laying the groundwork.
He noted that the QNUPS facility follows on from a recently-announced initiative to enable so-called insurance-linked securities, a specialist financial instrument aimed at the institutional market, to be offered from Gibraltar.
“We will continue to work closely with the private sector in the further development of this important industry," Isola added.
Rebranding
Today's announcement on Gibraltar's pending QNUPS facility is the latest development to come out of a major rebranding and restructuring of Gibraltar’s financial services industry which had its origins in The Rock's last general election, held in December 2011. As reported last week, that election saw the political party that had been in power for 15 years replaced by an alliance Government comprised of the Gibraltar Socialist Labour Party (GSLP) and Liberals.
In addition to appointing Isola about seven months ago as finance minister, the rebranding and restructuring has seen four experienced financial services executives appointed to specialist roles within a department that is now called Gibraltar Finance, and plans laid for a new locally-owned bank.
As reported here in January, the government was also looking to tighten up on the way QROPS are set up and run in Gibraltar, as the number of such schemes continued to grow rapidly.
As of today, HMRC's online listing of QROP schemes shows 33 in Gibraltar, more than three times as many as it had just two years ago.
