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UK Pension transfers for EU/EEA residents

The UK Government has stopped the transfer of UK pensions to most EU ‘company’ schemes as they are incompatible with UK rules. However, the good news is that residents of Europe plus Norway, Lichtenstein, Iceland and Gibraltar (known as the EEA or European Economic Area) have specific rules when it comes to the transfer of UK pensions to other pension schemes that are compatible with the UK regulations.

This made transfers to QROPS uneconomical and inadvisable for non-EEA residents, although a transfer to a specialist UK scheme is still available and has strong benefits over ‘Defined Benefit’ schemes, especially with regards death benefits and income flexibility. New QROPS transfers should only be considered where EEA residency is assured for 5 years as moving ‘out’ of the EEA would trigger the tax penalty within this period! Speak to us for advice on which type of transfer suits your circumstances.

Where EEA residency is assured there are considerable benefits of transfer from frozen UK company pensions to QROPS or from the new, more flexible, UK Personal Pensions. These benefits include:

  • A flexible Pension approved scheme under the UK Government/HMRC Rules
  • No tax charge or tax penalty for QROPS or UK transfers
  • Security of Investment with UK approved Trustees
  • The FULL capital value of the fund can be passed to your spouse on death
  • The FULL capital value of the fund can be left as an inheritance, free of UK Inheritance Tax, to children/chosen beneficiaries
  • You have full control over investment, currency and income decisions
  • You can access at least 25% of the fund as a Pension Lump Sum from age 55
  • Income withdrawals from age 55 WITHOUT reduction of income due to early retirement.
  • The capital remains an asset of the holder – thereby ensuring YOU direct monies to your chosen beneficiaries, in full.
  • Flexibility of drawdown options including full withdrawal of fund at retirement
  • Amalgamation/consolidation of schemes
  • Total compatibility with UK rules should you return to the UK!

So, the good news is that you CAN transfer your UK company pensions to a UK recognised and approved alternative that IS suitable for any EEA resident, without any tax penalty.

Now is a good time to consider a transfer of frozen UK pensions because the transfer values of Defined Benefit (Final Salary) Pensions are still unusually high. This is because transfer values are based on Gilts and the significant drop in Gilt yields after Brexit has forced transfer values to all-time highs!



Each EEA country has its own rules when it comes to when an individual is considered a tax resident. We have access to the rules of over 70 countries Worldwide and can give guidance on many. Tax residency is usually determined by the individual establishing residential ties, the location and residency of your spouse/partner, dependants and contract of employment or financial interest.


Again, each country’s tax system at the state/federal or provincial levels is different. We can give guidance on how UK pensions are taxed in over 70 countries Worldwide. Contact us accordingly.

Where an individual is both an EEA resident and resident in another country, the DTA with that other country will determine the individual’s tax residency and the country which has the primary right to tax the pension proceeds.


Taxable income includes pension income in the majority of countries. Residents are generally required to include in their income any and all amounts received as a “superannuation” or “pension benefit”.

Additionally, many countries require the reporting of ‘lump sums’ received from foreign pensions as although the PCLS, for example, is deemed tax free in the UK, it is NOT tax exempt in many EU countries.

However, it’s worth doing your homework because some countries have VERY attractive taxation on foreign pension income! For example, if you retire to Cyprus with a Malta QROPS you pay no tax on the pension income, based on the Double Taxation Agreement between these countries.

Portugal currently has a 10-year tax free period for residents drawing a UK pension and, in some cases, in France, you can encash the whole pension and pay less than 17% on the lump sum, which may prove attractive compared to their higher tax rate of 45%.

Again, you should contact us for guidance.


A foreign tax credit is sometimes available by residents of one country for tax paid in that country to the foreign jurisdiction where a DTA is in place. Even if there is no double taxation agreement, tax relief may be available by means of a tax credit. For example, if you pay tax at 15% on your foreign income in the country in which the income arises, then you may still have to pay tax in the UK. If the UK tax rate is 20%, you would only have to pay 5% of tax in the UK, as you would be given relief for the 15% of tax paid overseas.

Check if a DTA exists between the countries in which you reside and pay tax as this will detail what credits, rebates and allowances you are due.


From 6 April 2015, new rules were introduced which improve the flexibility with which access to UK Personal Pensions can be achieved. This flexibility is NOT afforded to Defined Benefit pensions, which is one reason that many Expats consider a pension transfer.

Generally, 25% can be taken UK tax free and the remaining 75% (whether income from an annuity, drawdown, or lump-sum) will be taxable at your marginal rates of UK tax up to the top rate of 45%.

UK residents are liable to UK tax on such income and, generally, non-UK residents are subject to UK income tax on UK source income too. Therefore, if you are non-UK resident and receive a payment from a UK Registered Pension Scheme, assuming the payment is not within your 25% tax free amount, it is liable to UK tax at your marginal rate, unless a Double Tax Agreement (DTA) exists with your country of residence and the UK provides exemption from UK tax on such income.


From 6 April 2015, the UK tax treatment of benefits from Person Pension schemes on death depends, amongst other things, on the age of the member at the time of death i.e. if the individual is pre or post age 75. By planning your pension benefits this tax can be mitigated.


There are Double Taxation Agreements/International Tax Treaties between the UK and around 150 other countries.

You can check if a DTA exists at


The UK regulations implemented from 9th March 2017 covering transfer of UK pensions to a country in the EU/EEA ensures there is NO tax penalty for transfers to QROPS/ROPS or UK based Self Invested Pension.


If you transferred UK pensions to a QROPS before the 9th March 2017 your tax position will rely upon the jurisdiction where the pension is held. The choices are most commonly Gibraltar and Malta.

GIBRALTAR is a British Overseas Territory represented in the EU by the UK but has no DTA’s with other countries. The QROPS pension payments to you would therefore be taxable in Gibraltar at a standard rate of 2.5%. This is not recoverable.

There is no UK income tax if you are non-UK resident (for at least 5 full tax years irrespective of the amount, or less than 5 years with total withdrawals in the non-resident period below £100,000).

There is no Gibraltar Inheritance Tax. You have protection from UK IHT. There should be no Lifetime Allowance (LTA) concerns as the transfer was measured against the LTA upon transfer to QROPS.

Protection from UK death benefit charges, if non-UK resident (and non-UK resident for last 5 tax years before payment).

MALTA does have DTA’s with numerous EU and other countries. This should ensure that pensions and annuities arising in Malta and paid to a resident of most EU countries may be taxed in that country. However, you should check the Malta DTA list at: -

There is no UK income tax if you are non-UK resident (for at least 5 full tax years irrespective of the amount, or less than 5 years with total withdrawals in the non-resident period below £100,000).

There should be no LifeTime Allowance concerns as the transfer was measured against the LTA upon transfer to QROPS.

There is no Maltese Inheritance Tax. You have protection from UK IHT.

Protection from UK death benefit charges, if non-UK resident (and non-UK resident for last 5 tax years before payment).

The information contained in this Site is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. The author is not giving direct legal or tax advice and the information contained on the site should not be acted upon without seeking professional advice.

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