Guernsey is looking to amend local pensions legislation ahead of April 6th to maintain their global QROPS leadership position.
At the end of 2011, HMRC issued draft legislation and guidelines to amend their existing Overseas Pension Transfer legislation. One of the most significant aspects of this legislation lies in the HMRC guidance which confirms the intention behind Condition 4 is that local and non-local members of any one QROPS receive precisely the same tax treatment of their pension. For example, with Guernsey QROPS, locals are currently taxed at 20% where non-residents are not taxed. Indicators point to the new legislation disallowing this discrepancy from April 6th 2012.
Guernsey thus has three options. The first is to deregister from the HMRC QROPS list. This would not be retroactive which would mean that the original pension transfers would remain authorised, but trustee reporting requirements to the HMRC would cease, leaving existing members in the best of both worlds. The second option is to introduce 20% tax across the board. This would make Guernsey as a QROPS destination extremely unattractive. Finally, new legislation could be passed on Guernsey to eliminate tax-at-source for residents as well as non-residents known as Gross-in, Gross-out legislation. This measure would enable full conformity with the new HMRC sourced pension transfer legislation and would enable Guernsey to continue as the world's foremost QROPS location.
Expat & Offshore is now able to reveal that, behind closed doors, the Guernsey Association of Pension Providers and key members of the States of Guernsey government are now pushing through such legislation to effectively save QROPS on the island. This legislation should be ready and active before April 6th and an announcement to this effect should be made tomorrow.