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.
Leave the Pension in the UK
If the pension remains in the UK, UK tax should not be due on the UK pension as long as the pension is taxable in Tunisia on Tunisian residents under the DTA (at rates up to 35%, with 25% or 80% tax free). However, the fund remains exposed to the UK death benefit charges.
Transfer to a Gibraltar QROPS
Transferring to a Gibraltar QROPS for non-UK residents (5 years +) can alleviate UK tax on payments (at up to 45%) with 2.5% Gibraltar tax on payments and no tax in Tunisia because taxed in source country, even if remitted to Tunisia. Furthermore, the QROPS can protect from the UK death benefit charges if non-UK resident (5 years +) and there is no Gibraltar IHT.
Transfer to a Malta QROPS
Transferring to a Maltese QROPS for non-UK residents (5 years +) can alleviate UK tax on payments (at up to 45%), no Maltese tax under the DTA for Tunisian residents, with tax payable at up to 35% in Tunisia after 25% or 80% deduction on the pension income. If non-Tunisian resident Maltese tax would be due (at up to 35%) with no tax in Tunisia even if remitted. Furthermore, the QROPS can protect from the UK death benefit charges if non-UK resident (5 years +) and there is no Maltese IHT.
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.
There is a DTA between the UK and Tunisia which states that pensions and annuities paid to a resident of Tunisia shall be exempt from tax in the UK provided that they are taxable in Tunisia.
There are separate provisions for Social Security and Government Service Pensions.
Gibraltar has no DTA with Tunisia, therefore the QROPS pension payments to you would be taxable in Gibraltar, currently at a rate of 2.5%.
No UK income tax if not 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 the last 5 years + before payment)
Malta has a DTA with Tunisia, this provides that pensions and other similar remuneration paid to a resident of Tunisia in consideration of past employment shall be taxable only in Tunisia. 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 Tunisia. Therefore the QROPS pension payments should not be taxable in Malta on Tunisian residents.
There are separate provisions for Government Service 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 the last 5 years + before payment).
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.
Individuals resident in Tunisia are generally taxed on their worldwide income.
Non-residents are generally taxed on their Tunisian-source income only. They are not taxed on the remittance of foreign income to Tunisia.
To be considered a resident of Tunisia, an individual must have a main residence in Tunisia, or be present in Tunisia for at least 183 days in the relevant calendar year.
Tax rates are progressive up to 35%.
Foreign national workers in certain sectors (e.g. export enterprises, offshore banks and hydrocarbon exploitation) can opt to pay a 20% attractive tax rate.
There is a special tax regime for foreign pensions paid to a Tunisian tax resident. Under this, an 80% deduction is granted on the foreign pension income transferred to Tunisia in order to determine the taxable pension (i.e. 80% of the pension income is tax free). In order to benefit from this 80% exemption, the Tunisian tax resident should remit his pension income to Tunisia and provide the Tunisian Tax Authorities with the necessary evidence of the transfer of the pension income to Tunisia (i.e. a bank statement). The foreign pension income of a Tunisian resident individual who has not remitted the pension to Tunisia is subject to a 25% deduction instead.
Taxable Pension income (i.e. 20% or 75%) is subject to income tax, at rates up to 35%.
That said, if Tunisia does not have a DTA with the country in which the pension is located (e.g. Gibraltar) then Tunisia should not tax the foreign pension income if it has been taxed in the source country.
A Pension Commencement Lump-sum would be taxed in the same way as pension income.
The tax treatment for foreign occupational as opposed to foreign personal pension schemes is the same. Furthermore the tax treatment is the same if the pension fund purchases an annuity.
There are no specific provisions regarding whether the growth in the foreign pension fund would be taxable in Tunisia. It is possible that the Tax Authorities may consider the growth as “other income” when received by a Tunisian resident.
The transfer of the accrued pension rights from a UK scheme to a QROPS should not be a taxable event in Tunisia.
Net wealth and net worth taxes are not imposed in Tunisia.
In Tunisia, there is no specific inheritance and estate tax. However, inheritance and gifts are subject to registration duties.
Tunisia has signed DTAs with approximately 35 countries, including the UK and Malta.
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.