Pension schemes stand to lose their QROPS status unless they relocate to a jurisdiction complying with the latest rules realeased by HMRC. The new rules which take effect post April 2012 reflect Malta’s current regulation of investment funds. In effect Malta is the only jurisdiction which does not need to amend its laws on pension schemes following HMRC's announcement.
Her Majesty’s Revenue and Customs has taken to task the UK domestic regulation of QROPS in a bid to curtail what they consider to be their abusive use. The changes which take effect post April 2012 reflect Malta’s current regulation of investment funds. Pension schemes resident in other QROPS favoured jurisdictions stand to lose their recognition as overseas pensions schemes (OPS) unless they relocate elsewhere or unless the home jurisdictions scrambles to a quick solution.
The deal breaker amongst the announced changes is the threat to rescind QROPS status where dividends distributed by the pension scheme are not treated to tax equally in the hands of all members. Jurisdictions should not differentiate between resident and non-resident members in the tax treatment of dividends they receive from the scheme. In Malta treatment of dividends distributed by a fund hinges on the place of residence of the fund. Dividends distributed by Malta funds from profits which have been subject to tax, are not taxed in the hands of the receiving member; the place of residence of the members is immaterial.
Malta is fast become the favoured jurisdiction of choice for foreign investment. It has proven its competitve edge in attracting foreign investment many times over, pre-empting the new test set by HMRC is one example of why.
