There is currently “a lot of interest” in Malta from some of the 300 Guernsey QROPS providers removed from Her Majesty’s Revenue and Customs’ list of approved schemes last month, sources close to the industry have told The Times Business.
Pension operators based in Malta could double to 16 by the end of the year
However, international reports that operators of qualifying recognised overseas pensions schemes formerly based in Guernsey are “flocking” or “piling” into Malta to set up new schemes may be a little exaggerated, the sources said.
Last month, the HMRC implemented new rules stipulating residents and non-residents pay the same tax rate, leaving just three approved pension schemes in Guernsey.
“The specific reason Guernsey was effectively shut down as a jurisdiction for QROPS is unclear,” the sources said. “Guernsey was told that it can only accept residents in its schemes and not non-residents. There is a lot of interest in Malta at the moment, and there are at least four or five trustees which are on the way to application.”
Eight operators are currently registered in Malta with up to four schemes each. Sources are confident that number can double to 16 by the end of the year, and Malta could potentially host up to 40 by 2017.
“The delicate issue is that the focus has shifted from Guernsey to Malta,” the sources added. “Jersey also emerged as an alternative but might not be considered as highly as Malta as the HMRC wants to see movement of pension monies into locations where those monies are taxed unless there is a double taxation treaty. We have 56 DTAs whereas somewhere like Jersey would have close to none. Jersey is a zero per cent tax location so it is debatable whether operators will consider Jersey. Besides, our tax regime is completely transparent.”
Industry sources confirmed there are very good relations between Malta and the HMRC, and between the operators based on the island who are keen to preserve the jurisdiction’s reputation and integrity. Average staff hovers around 25 for each operator, with teams varying between 15 and 100. At least two operators are geared for considerable recruitment drives.
Citywire.co.uk yesterday quoted TMF International Pensions Solutions head Bethell Codrington saying that 90 per cent of Guernsey’s schemes were now planning to establish themselves in Malta.
Guardian Wealth Management chief executive David Howell told the portal clients with Guernsey QROPS needed to identify a jurisdiction where they would not be hit with a large tax increase. Malta, he said, had the right characteristics. Under the old Guernsey regime, the majority of QROPS clients paid no tax, the site said.
Last month the HMRC stressed QROPS were intended to be the equivalent of UK-registered pension schemes. “It was never intended that those transferring their UK pension savings should gain tax advantages that were not available in the UK,” it said.