QROP For French Residents
LEARNING OBJECTIVES
We’re passionate about providing high quality, relevant and up-to-date financial information to British Expats in France.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
How a QROPS works in France
The best options available to British Expats
Whether a SIPP or QROPS is more appropriate
The importance of regulated advice
This article is intended for British Expats in France with UK pension accounts.
A Qualifying Recognised Overseas Pension(QROP) is a type of overseas pension scheme that meets certain criteria set out by HMRC. A QROP can receive transfers from one or more UK schemes.
Important to note, the rules and regulations surrounding QROP are complex and subject to change and can vary depending on the country in which the individual resides.
This article aims to explore overseas pension schemes and how they can be of use for those who are tax residence in France.
QROPS - Qualifying Recognised Overseas Pension Scheme
If you have UK-registered pension schemes, whether an occupational pension scheme or personal pension such as a SIPP, transferring to a QROPS is one option to consider.
QROPS allows individuals who have built up UK pension benefits to transfer their pension funds to an overseas scheme while still retaining certain tax benefits associated with their pension savings.
QROPS France
A Plan d’Epargne Retraite Populaire (PERP) is a long term savings plan with tax benefits in France. As of December 2016, HMRC determined that the French PERP / QROPS no longer fulfilled their criteria and it was removed from their list.
On this basis, a French QROPS no longer exists.
HMRC QROPS
There are both independent providers and company schemes available in the QROPS market. As no French PERP's qualify, private schemes are the only suitable option for French residents.
HMRC QROPS LIST
A list of all the available schemes can be found here. The HMRC QROPS list is fluid and updated regularly, as such you should always check your intended QROPS provider is listed before initiating a transfer.
If you transfer to a scheme that is not listed, it will be classed an unauthorised payment and incur a tax of up to 55%.
QROPS Malta
Whilst QROPS are available in other locations such as Gibraltar and Guernsey, a Maltese-based solution is the most suitable for French residents.
Reasons for this include:
Tax Treaty - Malta has a tax treaty with France meaning you can withdraw your pension income with no tax held back at source.
Flexible access - Unlike a Gibraltar or Guernsey based scheme, you can access your pension in any way you like. This includes lump sum, regular payments, and a combination of the two.
Protection from UK Inheritance Tax - QROPS can be passed free of UK IHT to non UK resident heirs.
Receive Income in Euros - You can invest and withdraw in euros, mitigating the currency risk of a standard UK pension.
Wider range of Investments - Choose from an extensive range of investments including low cost index tracking funds, mutual funds, government bonds, and listed shares.
Lifetime Allowance LTA (no longer a factor but worth mentioning) - Previously, a pension valued over the LTA limit of £1.073m would incur an LTA tax of 25% when moving to an overseas scheme. This was removed in the chancellor's budget of March 2023.
QROPS Overseas Transfer Charge (OTC)
The OTC is a 25% tax applied to pension transfers if the members live outside the European Economic Area EEA. As France and Malta are within the EEA, no OTC applies when transferring to a Maltese QROPS as a French resident.
Disadvantages of a QROPS
Whilst a QROPS has many benefits, there are certain disadvantages you should be aware of:
Lose UK protection - Malta is a recognised financial hub regulated by the Malta Financial Services Authority (MFSA). However, you lose the protection of the Financial Conduct Authority FCA, Financial Services Compensation Scheme FSCS, and The Pensions regulator.
Expensive - QROPS providers are expensive, costs start at £750 per setup and £950 per annum. This is over 4 times the costs of an International SIPP.
Unregulated investments - Members can invest in unregulated investments resulting in a loss of money or frozen investments you cannot access.
Commission setup - Via the use of investment bonds, advisers can take large commissions when setting up policies. This results in diminished returns and exit penalties for withdrawing your pension pot.
International SIPP VS QROPS
An International SIPP is a UK pension created for non-UK residents. Launched in 2018, they were an alternative to QROPS for expats with UK pension schemes.
An International SIPP will provide many of the same benefits as a QROPS, such as flexible drawdown options, ability to receive ongoing management and advice, mitigation of currency risk, and extensive investment choice.
At the same time, they are available at a quarter of the cost, retain the robust protection of the UK regulators, and will operate as a standard UK pension scheme in the event you return.
That being said, they do not offer the same IHT benefits and you will need to apply for an NT code to receive your pension income gross of UK tax.
Expat Financial Advice
Ultimately, whether or not a QROPS is the right option for you will depend on your individual circumstances. This includes factors such as retirement plans, tax situation, investment preferences, and long-term residency plans
Should it be deemed the most suitable option, selecting the best QROPS provider, investment product and funds, is paramount in achieving your desired outcome.
The Wealth Genesis specialises in cross-border pension transfers and tax-efficient investing for French residents. We have a thorough understanding of both UK and French pension regulations.
We provide bespoke investment strategies that are tailored for your unique requirements. These strategies are not standard, one-size-fits-all solutions but are personalised to you. This ensures that we can reach your investment and financial planning objectives.
By charging the same flat fee to all our clients, we guarantee no conflicts of interest in the advice provided.
Contact us using the button below to discuss your pension transfer options and requirements.
FAQs
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We charge a £3000 advice fee and an ongoing management fee of 0.85% per annum.
More information on our fee structure can be found here.
QROPS and International SIPP provider costs vary.
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Previously, for 5 years after the completion of your QROPS transfer, your QROPS provider had to report any unauthorised withdrawals. For example, taking money before age 55. In the event of this happening, you could be taxed 55%.
If you've lived in France or outside the UK for 5 consecutive tax years or more, the tax laws of your country of residence will apply to the QROPS. This means any withdrawals will need to be declared to the French Impot and taxed accordingly.
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As of April 2017, the 5 year rule was extended to 10 consecutive tax years.
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Yes, you can take a 30% lump sum payment but it is still taxable in France. Under the prevalent forfeiture, you can apply for a special one-off tax of up to 15%. (7.5% with an S1 form) Whilst we can not provide tax advice we work with a panel of local experts throughout the country who can assist you.
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There are several Malta QROPS providers to choose from. We recommend based on factors such as cost, functionality, servicing, and reputation. Importantly we are not tied to any provider and have terms of business with all providers in the market.
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You cannot transfer your UK state pension but you will continue to receive it if already in payment. There is now also the option to have your money pension paid in Euros.
