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Guernsey Aims To Revive QROPS Business

Thursday, July 12, 2012

The Guernsey government has announced that it will revise its Section 157E pension scheme structure in an effort to have it recognized by the UK tax authority as a Qualifying Recognized Overseas Pension Scheme (QROPS) that can accept both resident and non-resident taxpayers.

UK taxpayers can transfer their pensions on a tax-free basis to QROPS when looking to permanently take up residence in another country. However, following an ill-communicated rule change implemented by the UK tax authority, HM Revenue and Customs, on April 6, 2012, the majority of Guernsey's domestic schemes lost their QROPS status. The rule change has meant that QROPS can now only be offered in the territory in which the UK taxpayer is newly resident.

Guernsey's response, announced recently by Guernsey Treasury Minister, Gavin St. Pier, would revert the island's Section 157E pension structure back to its pre-existing form - undoing amendments aimed at complying with the new rules - but would add new taxing provisions on pensions transferred by non-residents to ensure equitable taxation between resident and non-resident persons.

According to St. Pier, the plans would involve income from occupational pension schemes being taxable for non-residents as well as residents, by removing the exemption for pensions and annuities paid in respect of services performed wholly outside Guernsey. The payer of a pension or annuity would be required to deduct tax whether or not the recipient is resident in Guernsey and whether or not the services which led to the payment of that pension or annuity were performed in Guernsey.

Secondly, a legislative amendment will remove the exemption from tax on annuities and lump sums paid to non-resident members of approved retirement annuity schemes and retirement annuity trust schemes. This will mean that such annuity income or lump sums will be taxable on the same basis as if paid to a resident of Guernsey, albeit subject to Guernsey provisions that allow for the exemption of certain lump sums from taxation.

Rex Cowley, principal of the Jersey-based New Dawn Consultancy told International Adviser that in essence the plans seek to enable Guernsey to "potentially tax all payments from a Guernsey pension at the domestic rate of tax, ie, 20%, but allow an exemption on certain lump sum payments, in order to create the ability to revive a tax free [benefits commencement] lump sum, ie, 30%. The net result is 20% tax on pension income, with a 30% tax free lump sum, irrespective of the member's residence.”

The changes are to be brought before the island's legislative assembly, the States of Guernsey, in September, but, if adopted, will have retrospective application from June 27, 2012.

The government has confirmed that provision would be made to ensure no retrospective impact on schemes being managed on behalf of non-residents who transferred their UK pensions to Guernsey prior to the rule change.

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Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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