This week's UK Budget has confirmed that Guernsey is well
placed to maintain its position as the jurisdiction of choice for
Qualifying Recognised Overseas Pension Schemes (QROPS), according
to Guernsey Finance – the promotional agency for the
Island's finance industry.
In December last year HMRC launched an eight-week consultation on a
series of proposed amendments to the regulations regarding QROPS,
with the final proposals outlined in the budget and set to take
effect from 6 April 2012.
Guernsey providers submitted consultation responses agreeing
that changes to tackle abuses were appropriate but lobbied firmly
against the introduction of a proposed Condition 4, which
effectively meant that residents and non-residents must be treated
equally in terms of tax on benefits paid within any QROPS scheme.
At the same time, Guernsey moved forward with creating a new
category of pension scheme which, by extending the tax exemption on
pension benefits to residents, was designed to meet HMRC's
proposed revised criteria for a scheme to be considered a
Wednesday's budget revealed that HMRC is pushing ahead with
many of its proposed amendments, including tackling abuses. The
final legislation has removed Condition 4 but this has been
replaced by a new Paragraph 6 which will have the same effect in
that any scheme wishing to be a QROPS from 6 April 2012 must offer
the same tax relief to residents as non-residents.
Fiona Le Poidevin, Deputy Chief Executive at Guernsey Finance,
said: "We welcome the fact that HMRC is taking action to
tackle abuses and in particular, jurisdictions which allow 100%
commutation, such as New Zealand. This has never been the case for
Guernsey pensions, including Guernsey QROPS and indeed, we are very
proud of being recognised as a cooperative and compliant
"It is disappointing but not unexpected to see that while
Condition 4 has been removed, there is now a new Paragraph 6 which
will have the same effect of ensuring residents and non-residents
are treated equally in terms of tax on benefits paid within QROPS
"Having said that, in Guernsey we have already taken steps
to establish a new parallel pension regime where qualifying schemes
will offer the tax exemption on pension benefits to both residents
and non-residents. It is our belief that this 'fleet of
foot' approach means that Guernsey will continue to be able to
offer schemes which receive QROPS status beyond 6 April.
"In fact, looking at the final legislation in more detail
it is comforting to see that the exemption within the new Guernsey
schemes will qualify as tax relief based on the definition within
HMRC's amended regulations. This is in contrast with any
exemptions which apply by virtue of Double Taxation Agreements
(DTAs) and therefore, the final outcome of the changes is probably
less favourable than might have originally been envisaged to
jurisdictions hoping to rely on an extensive network of DTAs.
"The UK Budget also states that if in the future a
jurisdiction makes changes which provide tax advantages that were
not intended to be available under the QROPS regime then all such
schemes will lose their status. This appears to be simply a
restatement of the fact that schemes must always be compliant with
the conditions for being a QROPS. We are confident that Guernsey
has responded quickly and appropriately to ensure our schemes will
meet the conditions for being considered a QROPS from 6 April and
our cooperative and compliant approach means that we will not be
making any changes which risk losing this status.
"In summary, Guernsey has taken decisive action to ensure
that it is well placed to provide a very competitive regime and
therefore retain our position as the jurisdiction of choice for
QROPS and related products. This is certainly the key message which
we will be taking to clients and their advisers when we host our
seminar in London on 23 May."
The seminar, titled QROPS: Look no further than Guernsey, is
being held by Guernsey Finance and the Guernsey Association of
Pension Providers (GAPP). It takes place from 4pm on Wednesday
23 May in the Stevenson Theatre at The British Museum, Great
Russell Street and follows on from a series of QROPS events that
Guernsey Finance has held in London and other UK cities in the last
few years. Anyone wanting more information or looking to book a
place can contact Jennifer Baudains +44 (0) 1481 720071 or
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