A QROPS is a Qualifying Recognized Overseas Pension Scheme and for those seeking a retirement in a low tax and sunshine country it can be a useful investment and pension vehicle. It has been used most effectively by British citizens resident in the EU/EEA by transferring their UK based pensions into an EU/EEA based QROPS scheme. But one can be created with a lump sum as well. Since it is a British arrangement in origin it is not well known by other EU nationals, but they can in certain countries benefit from the same advantages in investing lump sums.


The normal UK pension schemes require an annuity purchase, which are low yielding, incur income tax and the capital is lost to your heirs. A QROPS does not require an annuity and the capital passes to your heirs.

Passing a QROPS to your love ones is faster and easier than UK pension arrangements and the 45% inheritance tax is avoided as it does not apply to a QROPS. The UK domicile is relevant and a complex subject. Please consult us for advice on this.

Up to 25% lump sum tax free can be paid out of a QROPS if needed.

An increased drawdown pension can be achieved compared to UK rules and can be up to 50% more. The QROPS also avoids UK tax rates from 20% to 45%. Low tax and sunshine countries usually apply lower rates to pensions, for example the Cyprus rate is 5%.

There is much greater flexibility and control on the underlying investment profile and the portfolio can for example include quoted shares, Exchange Traded Funds ETFs, and unit trusts. However only up to 10% can be invested in alternative investments such as Structured Products.

Currency exchange risks can be eliminated. Living in the € zone means spending and having ones capital in the € zone. QROPS can invest and be denominated in €s and so prevent an erosion of capital and income.

The UK pension has obscure charging structures which are not to the advantage of the holder. QROPS rules and charges are clear cut and agreed at the outset.

The UK Overseas Transfer Charge of 25% is avoided by a QROPS if the pension member is resident in the EEA and the QROPS is established in the EEA.

Several UK pension arrangements can be consolidated into one QROPS which simplifies the management and reduces costs.

The UK has constantly changed the taxation and legislation on UK pension arrangements and is likely to do so again. Investing in a QROPS means that there is no such risk of change. BREXIT is a source of concern at this time and no definite agreements have been reached with regard to UK private pensions. Many European countries do not allow access to the capital in pension arrangements and so do not have any sense of expediency on the subject. Some countries, such as France, regard lump sum payments as income and tax them accordingly. Anyone moving to France should take their tax free lump sums before moving from the UK. It maybe that after BREXIT EU countries could tax UK private pensions as straight investment vehicles with capital gains and income taxes being paid as the portfolio moves along. The right to passporting by UK financial companies is likely to be lost. A Euro QROPS would overcome this.

geoffreyheywood@heywoodadvisory.eu   Tel:  +356 99725151