Do you have a UK registered pension and are you a tax resident in the Czech Republic?

If so, and your pension remains in the UK, you should be aware of your possible UK tax obligations. Furthermore, benefits could be available should you transfer these pension funds out of the UK to other secure jurisdictions under HMRC’s favourable Qualifying Recognised Overseas Pension Scheme (QROPS) regime.

Tax Options

Leave the Pension in the UK

Leave the Pension in the UK

If the pension remains in the UK, where the DTA conditions are satisfied, no tax should be due on such income in the UK with tax due in the Czech Republic at 15% on such income for Czech residents. If not Czech resident UK tax may be due (at up to 45%). Furthermore, the fund remains exposed to the UK death benefit charges.

Gibraltar QROPS

Transfer to a Gibraltar QROPS

Transferring to a Gibraltar QROPS for non-UK residents (5 years +) can alleviate UK tax (at up to 45%) with 2.5% tax in Gibraltar being due on payments and tax in Czech Republic for residents at 15%. The Gibraltar tax paid may be expensed by the taxpayer against his / her taxable income in the following taxable period. No Czech tax on such income for non-Czech residents, even if remitted to the Czech Republic. No tax on transfer to the QROPS and no Czech tax on investment growth in the QROPS. Furthermore, the QROPS can protect from the UK death benefit charges if non-UK resident (5 years +) and there is no Gibraltar IHT.

Malta QROPS

Transfer to a Malta QROPS

Transferring to a Maltese QROPS for non-UK residents (5 years +) can alleviate UK tax (at up to 45%) with no tax in Malta due on payments if the DTA conditions are satisfied with tax payable in Czech Republic for residents (at up to 15%) under the DTA. No Czech tax on such income for non-Czech residents but then Maltese tax (at up to 35%) would be due. No tax on transfer to the QROPS and no Czech tax on investment growth in the QROPS. Furthermore, the QROPS can protect from the UK death benefit charges if non-UK resident (5 years +) and there is no Maltese IHT.

If you leave your pension in the UK

If you leave your pension in the UK

From 6 April 2006 a single set of rules came into effect. Under this system, the tax treatment for all types of approved schemes, including occupational schemes, small self-administered schemes, personal pensions, self-invested pension plans and retirement annuity contracts have been amalgamated into the rules for Registered Pension Schemes. These can be either Defined Benefit or Defined Contribution (DC) Schemes.

DTA between the UK and Argentina

DTA between the UK and the Czech Republic

There is a DTA between the UK and the Czech Republic. This states that pensions and other similar remuneration paid in consideration of past employment and annuities paid to a resident of the Czech Republic shall only be taxable in the Czech Republic.

There is separate provision for Government Service Pensions.

Gibraltar QROPS

Gibraltar QROPS

Gibraltar has no DTA with the Czech Republic, therefore the QROPS pension payments to you would be taxable in Gibraltar, currently at a rate of 2.5%.

No UK income tax if non-UK resident (for 5 tax years + or total withdrawals are below £100,000).

No Gibraltar Inheritance Tax.

Protection from UK IHT.

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

Malta QROPS

Malta QROPS

Malta has a DTA with Czech Republic, this provides that pensions and other similar remuneration paid to a resident of the Czech Republic in consideration of past employment shall be taxable only in the Czech Republic. Currently Malta does not treat QROPS as “paid in consideration of past employment” and therefore the Other Income Article of the DTA applies. This also allocates sole taxing rights to the Czech Republic. Therefore the QROPS pension payments should not be taxable in Malta for a resident of the Czech Republic.

There are separate provisions for Government Service and Social Security Pensions.

No UK income tax if non-UK resident (for 5 tax years + or total withdrawals are below £100,000).

No Maltese Inheritance Tax.

Protection from UK IHT.

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

Pension benefits

Pension Death Benefits Payment – UK Tax

From 6 April 2015, the UK tax treatment of benefits from DC schemes on death depends, amongst other things, on the age of the member at the time of death (i.e. pre or post 75). From this date, generally, there should be a lower UK tax cost on passing pension value to heirs on death. However, that said there is still a possible current tax rate of up to 45%.

For those that are non-UK resident and have a QROPS the UK tax cost on succession can be less.

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This general information has been provided on the basis of our understanding of the current legislation in the UK, Gibraltar & Malta as of April 2015. Should any of the information provided be inaccurate, incomplete or misleading, we take no responsibility for any reliance placed on it. We recommend that individuals always seek specialist multi-jurisdictional (where relevant) tax advice so that their individual circumstances can be fully considered.