Tax And QROPS Considerations For Migrants To France

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Many people migrating abroad have looked at transferring their pensions to a Qualifying Recognised Overseas Pensions Scheme (QROPS) since they were introduced into UK legislation in April 2006.

To decide whether to transfer your UK pension to an offshore pension, that has registered as a QROPS, several factors have to be taken into consideration – not least the tax implications.

However, since the UK changed its rules on overseas pension transfers in April 2006, the UK pension funds do not have to transfer to the same destination as the migrant. It is important, therefore, that the migrant knows not only the tax benefits of the jurisdiction of where their QROPS  is, but the tax system on pension income (and other benefits) of where they live now.

UK migrant’s tax resident in France, taking income from their QROPS, would need to be aware of the tax situation. For some types of QROPS that are established in a certain way, payments could be considered as a purchased annuity and, therefore, treated as reportable taxable income on an annual income tax return in France.

The annual taxable amount from a purchased annuity is banded and is dependent on the individual’s age. Up to 70% of the income from the QROPS would be subject to tax in France for those up to the age of 50 and their is a sliding scale to 30% for those aged over 69.  

UK migrants could also find their QROPS funds subject to inheritance tax (IHT) in France upon death. If the deceased is a resident of France, their estate would be expected to pay tax on their worldwide assets (including offshore pension benefits),