Introduction - Foleon



There are a number of issues that firms need to consider before becoming involved with overseas clients.

|Spring Budget 2017 – 25% overseas tax charge |

|The government announced a number of changes to the tax treatment of transfers of tax relieved pension savings to QROPS. Legislation will|

|be introduced in Finance Bill 2017. |

|From 9 March 2017, in addition to the checks that you make to ensure that an overseas transfer is a recognised transfer you will also |

|need to check if the overseas transfer charge applies. |

|The overseas transfer charge will apply on transfers to QROPS if your scheme member formally requested their transfer on or after 9 March|

|2017 and none of the following apply |

|they are resident in the country where the QROPS receiving the transfer is based |

|they are resident in a country in the European Economic Area (EEA) and the QROPS they are transferring to is based in another EEA country|

|the QROPS they are transferring to is an occupational pension scheme and they are an employee of a sponsoring employer under the scheme |

|the QROPS they are transferring to is an overseas public service scheme and they are employed by an employer that participates in that |

|scheme |

|the QROPS they are transferring to is a pension scheme of an international organisation and you are employed by that international |

|organisation |

|If your member formally requested the transfer before 9 March 2017, for example the member requested in writing for a transfer to be made|

|to a named QROPS but the transfer payment was not made until after 9 March 2017, the 25% overseas transfers charge will not apply. |

| |

Passporting

The FCA and in turn SimplyBiz have issued guidance in relation to advising clients who are resident overseas. Pensions for example would fall under IMD whereas if you were to give advice on investments, this would require you to opt into MiFID. SIPPs though conversely, whilst they are pensions, if they do hold an investment such as shares or OIECs would fall under MiFID also.

Passporting can be relatively easy where the members are from the European Economic Area (EEA) and a form can be completed - see the FCA link below.

However, firms wishing to carry on regulated activities (e.g. advising on investments) with or for residents of the Channel Islands and the Isle of Man, or indeed other non-EEA countries (e.g. Australia), may require appropriate authorisations from the relevant financial services regulator of the country into which such services are being provided. It is important to appreciate that the regulatory situation will differ from country to country, and firms may have to ascertain the regulatory stance of the relevant country prior to carrying on any regulated activities. There is also a potential impact on capital adequacy. Please refer to the compliance manual for detailed instruction.

Obviously, you will need to understand the client’s tax statuses and demonstrate good knowledge of the tax and benefits relating to the country in question etc. and any impact this may have on the client’s arrangements.

FCA’s CONNECT site should be used for all passporting applications. The FCA do not charge a fee for passport notifications, but the host state may charge a fee to register your firm (although we think this only currently applies to The Netherlands).

 

Timescales are about 28 days, slightly longer for MiFID.

 

Further details from the regulator are on the link below:



If you require assistance with completion please contact the Applications Team on 01484 439 123

 

Providers

Many providers will simply no longer transact business with clients who are now resident abroad. From a pensions point of view, we sent a survey to the major providers a few years ago to ascertain their stance – see results in the Surveys room on the Pensions tab of the website. In particular, the USA and Canada can be very troublesome. Check with the provider concerned.

PII

We strongly recommend speaking with your PI insurer about your intentions, as your PI policy, almost certainly has a Jurisdiction and Territorial Limits exclusion.

Some PII providers may not cover you when giving advice to overseas clients. USA and Canada often prove to be problematic. It is therefore worth checking that you do have cover with your current PI provider.

Malta QROPS – Tighter Regulations - from June 2019

The Malta Financial Services Authority (MSFA) has made significant changes to the Maltese pension regulations which will have a major impact on how advisers operate in the jurisdiction. 

The new rules will also affect the way in which pension trustees administer both new scheme applications and existing members on a number of levels. It is estimated that in the UK alone, around 30,000 UK pensions have already transferred into a Malta-based Qualifying Recognised Overseas Pension Schemes (QROPS).

Advisers working with clients in Malta will be subject to much tighter requirements. According to the financial watchdog, it is no longer enough for the investment adviser to just be licensed. Now, the license must allow the adviser to provide investment advice to the Member. 

All advisers have until 30 June 2019 to obtain the necessary licenses to continue providing advice to a client, although some aspects of grandfathering over, may apply to some. With effect from 1 July 2019, anyone not meeting the above requirements will not be permitted to carry on providing investment advice in respect of accounts held by a Malta Retirement Scheme.

The changes include:

• Tougher regulations further enhance client protections

• It is no longer enough for the financial adviser to only be licensed.

• An adviser’s license must also allow them to provide investment advice to the member.

• The adviser must also be regulated in the jurisdiction where the client is based.

• The Retirement Scheme Administrator is also expected to ensure that a member's investments are in line with the risk profile of each member. 

QROPS

Clients can transfer UK pension schemes to overseas pension schemes but the scheme must be registered with HMRC. If the accepting scheme is not a Qualifying Recognised Overseas Pension Scheme, the payment could be treated as an unauthorised payment and taxed accordingly.

Remember, QROPS are not products, it is simply a piece of HMRC legislation and its intention was to allow Expats to move monies overseas. Any overseas scheme can register under the QROPS legislation and so accept transfers from the UK.

These pension schemes are worldwide and HMRC keep a list on the Gov.uk website:



Please be aware that not all QROPS may appear on the list to view. Schemes can elect not to be shown/listed so the only way to check is to contact the overseas scheme directly.

Further guidance on the QROPS legislation can also be viewed here:

Advisers should also be aware that we are unable to comment on the international taxation issues relating to QROPS.

Emigrated abroad and ready to start taking pensions income?

Pension payments are usually made in sterling and can be paid direct to an overseas account for those who have emigrated or living in another country at the time.

The double taxation agreement may allow the pension to be paid gross in the UK and taxed in the country of residence.

This is obviously an ideal choice if the tax regime in the country of residence at that time is more attractive than the UK. The member should complete the appropriate double taxation form (available from the Insurance Company) in duplicate and send it to the local receiver of Revenue in the country of residence. The UK arrangement paying the pension must deduct UK Income Tax until instructed to make gross payments.

Emigrating out to the USA – Want to transfer your pension there? Sorry!

Presently, no agreement exists between the UK and the USA relating to transfers. The IRS currently will not accept transfers from UK appointed arrangements into the US.

Although the IRS is reconsidering this, no timescale or implementation date is currently set. However whilst transferring benefits to the USA isn’t on the cards just yet there were some changes in 2004 when tax breaks arrived for those companies which transferred employees between Britain and the USA and whom wished to pay into schemes. The ‘Double Taxation Convention’ was designed to ease previous problems and seconded employees are now able to remain in their home country’s pension arrangement without suffering adverse tax consequences such as double taxation. Under the agreement USA employers are also eligible for tax relief on contributions to UK schemes.

QROPS Caution

Some unscrupulous companies have historically targeted UK residents, urging them to transfer pension funds to an overseas scheme with the promise of 100% of the fund being paid out as a lump sum. These emails and phone calls have been targeted at individuals who have no intention of emigrating or leaving the UK.

We have great concerns that any such payment will be treated as an unauthorised payment of course and will trigger serious tax changes to the client, as well as the loss of potential approval. HMRC have issued stark warnings that they will pursue the tax charge where this occurs.

National Regulators

Albania

Bank of Albania

Australia

APRA Australian Prudential Regulation Authority

ASIC Australian Securities & Investments Commission

Reserve Bank of Australia

Austria

Austrian Financial Market Authority

Bahrain

Central Bank of Bahrain

Bermuda

Bermuda Monetary Authority

Brazil

Securities and Exchange Commission of Brazil

Canada

Alberta Securities Commission

Bank of Canada

British Columbia Securities Commission

Financial Institutions Commission

Financial Services Commission of Ontario

L'Autorite des Marches Financiers

Manitoba Securities Commission

Nova Scotia Securities Commission

Ontario Securities Commission

Cayman Islands

CIMA Cayman Islands Monetary Authority

Chile

Comision Clasificadora de Riesgo

China

CBRC China Banking Regulatory Commission

CSRC China Securities Regulatory Commission

Czech Republic

Czech National Bank

Denmark

Finanstilsynet

Dubai

DFCA Dubai Financial Services Authority

Finland

Financial Supervision Authority

France

AMF Autorite des Marches Financiers

Bank of France

Germany

BAFIN Bundesanstalt Für Finanzdienstleistungsaufsicht

Deutsche Bundesbank

Gibraltar

Financial Services Commission of Gibraltar

Guernsey, Channel Islands

Guernsey Financial Services Commission

Hong Kong

HKMA Hong Kong Monetary Authority

SFC Securities and Futures Commission

India

SEBI Securities and Exchange Board of India

Indonesia

Capital Market and Financial Institution Supervisory Agency

Ireland

Irish Stock Exchange

The Financial Regulator

Isle of Man

Financial Supervision Commission

Italy

Banca d'Italia

CONSOB Commissione Nazionale per le Societa e la Borsa

Jamica

Financial Services Commission

Japan

Bank of Japan

Financial Services Agency

Securities and Exchange Surveillance Commission

Jersey, Channel Islands

Jersey Financial Services Commission

Luxembourg

CSSF Commission de Surveillance du Secteur Financier

Malaysia

Bank Negara Malaysia

Securities Commission, Malaysian

Malta

Malta Financial Services Authority

Monaco

Government of Monaco

Namibia

Namibia Financial Institutions Supervisory Authority

New Zealand

New Zealand Securities Commission

Norway

Kredittilsynet

Pakistan

Securities and Exchange Commission of Pakistan

Peru



Qatar

Qatar Financial Centre

San Marino

Banca Centrale della Repubblica di San Marino

Singapore

MAS Monetary Authority of Singapore

Slovakia

National Bank of Slovakia

South Africa

Financial Services Board

South Korea

Financial Supervisory Service

Spain

CNMV Comision Nacional del Mercado de Valores

Sweden

Finansinspektionen

Switzerland

Swiss Federal Banking Commission

Taiwan

Securities and Futures Bureau

Thailand

Bank of Thailand

Securities and Exchange Commission

The Bahamas

Securities Commission of the Bahamas

The Netherlands

Authority for the Financial Markets

De Nederlandsche Bank N.V.

Trinidad & Tobago

Trinidad & Tobago Securities and Exchange Commission

Turkey

Capital Markets Board of Turkey

Uganda

Capital Markets Authority

UK

FCA Financial Services Authority

US Virgin Islands

Financial Services Commission

USA

CFTC Commodity Futures Trading Commission

Federal Reserve Bank of New York

NASD National Association of Securities Dealers

SEC Securities and Exchanges Commission

US Federal Reserve

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