Selecting the best QROPS jurisdiction. Malta QROPS details explained
Having established that making an overseas (QROPS) pension transfer is in your best interests the next stage is to determine which location is most advantageous for you. It is therefore important to ask appropriate questions to establish whether or not all of your requirements are being met. Only after this step should you consider who may be the best QROPS provider. Every jurisdiction has their own benefits and drawbacks compared to each other. What follows is an in depth look at Malta as a QROPS jurisdiction of choice including the current rules and news of potential changes, tax implications, a list of QROPS providers, and the Double Taxation Agreements (DTAs) in place.

QROPS Malta key facts

Maltese pension rules

Malta QROPS rules are set according to the Retirement Pension Act which superseded the Special Funds (Regulation) Act 2002 and are as follows;

  • All pensions must be regulated by the Malta Financial Services Authority (MFSA) and registered under the Retirement Pension Act
  • Any scheme will be excluded from being recognised as a pension scheme if;
  • There are 5 or fewer members

    This was previously 50 years of age which would have been super-ceded by HMRC rules for QROPS to qualify i.e. QROPS would still only allow retirement from the UK minimum age of 55
  • No tax on growth (income or capital gains). This is via the local Income Tax Act and excludes immoveable property held in Malta
  • No inheritance tax
  • No death tax
  • 30% tax free pension commencement lump sum (PCLS) is available after the minimum retirement age (55) is reached
  • All remaining funds, once the PCLS has been taken, must be used to provide an income for life. Annual withdrawals are thus limited based on current actuarial rates. This is expected to be changed by the end of 2015
  • If any pension fund is deemed sufficient to provide a liveable income then 50% of any excess can be withdrawn as a lump sum except where someone lives in Malta (For Maltese residents the liveable income is replaced by €50,000 p.a.)
  • Valuations to test for the additional income cannot be requested within the first 3 years of accessing a pension for the first time. Thereafter, valuations may only be performed once a year at most

Anticipated Malta QROPS rule changes

Following the latest amendment to UK rules Malta are in the process of mimicking Britain’s fully flexible pension regulations. This will give those of retirement age the entitlement to withdraw income as and when is suitable to their circumstances without limit.

Rules Maltese QROPS are subject to

QROPS must follow regulations set by both Malta and Her Majesty’s Revenue and Customs (HMRC) in the UK. For example, although the British rules enable overseas pension schemes full access to any funds held from the minimum age of 55 this is currently not allowed under Maltese law. QROPS located in Malta therefore can only provide a maximum annual income based on actuarial rates which estimate how much can be taken without the fund running out before death. As mentioned earlier, this rule is due to be altered to bring it inline with the British equivalent.

Since there are no UK rules governing tax rates all the Maltese bands of tax apply subject to the pension holder being a non-UK resident for 5 full tax years otherwise UK rules apply.

Maltese tax rates are as follows;

  • Income tax and capital gains tax on pensionable investments – 0%
  • Inheritance tax0%
  • Death tax0%

Tax on withdrawals are subject to whether someone is a Maltese resident or not;

Due to the high withholding tax that is applied it is important to ensure that your retirement destination holds a reciprocal DTA with Malta.

If Malta does not hold an appropriate DTA then you should consider a different location to find the best QROPS jurisdiction for your circumstances.

As for all pensions any withdrawals are potentially subject to tax in both the jurisdiction where they are based and also where you reside when benefits are being taken.

Double Taxation Treaties

Malta has signed a range of Double Taxation Agreements (DTAs) which are based on the OECD model. The way in which they are enacted is via the final draft being passed by Ministerial order into law. This effectively overwrites any conflicting domestic tax legislation. DTAs will stipulate in which country tax is due, which country to apply for relief in, and the rate of tax relief that you are entitled to.

Jurisdiction Signed DTA details
Albania Signed on 2nd of May 2000
Australia Signed on 9th of May 1984
Austria Signed on 29th of May 1978
Bahrain Signed on 12th of April 2010
Barbados Signed on 5th of December 2001
Belgium Signed on 28th of June 1974
Bulgaria Signed on 23rd of July 1986
Canada Signed on 25th of July 1986
China Signed on 2nd of February 1993
Croatia Signed on 21st of October 1998
Cyprus Signed on 22nd of October 1993
Czech Republic Signed on 21st of June 1996
Denmark Signed on 30th of December 1998
Egypt Signed on 20th of February 1999
Estonia Signed on 3rd of May 2001
Finland Signed on 24th of March 1975
France Signed on 5th of July 1977
Georgia Signed on 23rd of October 2009
Germany Signed on 8th of March 2001
Greece Signed on 13th of October 2006
Guernsey Signed on 12th of March 2012
Hong Kong Signed on 8th of November 2011
Hungary Signed on 6th of August 1991
Iceland Signed on 23rd of September 2004
India Signed on 8th of September 1994
Ireland Signed on 14th of November 2008
Isle of Man Signed on 23rd of October 2009
Israel Signed on 28th of July 2011
Italy Signed on 16th of July 1981
Jersey Signed on 25th of January 2010
Jordan Signed on 16th of April 2009
Korea Signed on 25th of March 1997
Kuwait Signed on 24th of July 2002
Latvia Signed on 22nd of May 2000
Lebanon Signed on 23rd of February 1999
Libya Signed on 5th of October 1972
Liechtenstein Signed on 27th of September 2013
Lithuania Signed on 17th of May 2001
Luxembourg Signed on 29th of April 1994
Malaysia Signed on 3rd of October 1995
Mexico Signed on 17th of December 2012
Montenegro Signed on 4th of November 2008
Morocco Signed on 26th of October 2001
Netherlands Signed on 18th of May 1977
Norway Signed on 2nd of June 1975
Pakistan Signed on 8th of October 1975
Poland Signed on 7th of January 1994
Portugal Signed on 26th of January 2001
Qatar Signed on 26th of August 2009
Russia Signed on 23rd of April 2013
Romania Signed on 30th of November 1995
San Marino Signed on 3rd of May 2005
Saudi Arabia Signed a convention for the avoidance of double taxation in regards to income tax on the 4th of January 2012
Serbia Signed on 9th of September 2009
Singapore Signed on 29th of February 2008
Slovakia Signed on 7th of September 1999
South Africa Signed on 16th of May 1997
Spain Signed on 8th of November 2005
Sweden Signed on 9th of October 1995
Switzerland Signed a convention for the avoidance of double taxation in regards to income tax on the 25th of February 2011
Syria Signed on 22nd of February 1999
Tunisia Signed on 31st of May 2000
Turkey Signed on 14th of July 2011
United Arab Emirates Signed on 13th of March 2006
United Kingdom Signed on 12th of May 1994
United States of America Signed on 8th of August 2008
Uruguay Signed a convention for the avoidance of double taxation in regards to income & capital gains tax on the 11th of March 2011

Full details of the double taxation agreements can be found on the Malta Financial Services website

HMRC lists Malta QROPS providers

The QROPS list of recognised overseas pension providers is currently updated bi-monthly. The usual caveats of the list being self certified and not to be trusted to prevent an unauthorised payments charge continue to apply. Bearing this in mind, the latest list of Maltese QROPS providers can be found here.
As with using any financial provider it is important that you do your own due diligence prior to making any final decision.

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Is Malta the best QROPS jurisdiction for you written by Liberty Wealth average rating 3.8/5 - 29 user ratings