QROPS in Vietnam

    Should you transfer your UK pension?

    Are you an expat living in Vietnam? Have you got a UK pension? Here are your options for the tax-efficient management of your pension.

    If your pension remains in the UK, you may have UK tax obligations. 

    You could do better if you transfer your pension funds out of the UK.

    Such a transfer into a Qualifying Recognised Overseas Pension Scheme (QROPS) requires qualified advice.

    Here's an overview of your options...but if you have specific questions, don't hesitate to contact us and we'll help.

    Options

    Possibilities for your British pension - at a glance

    You have 3 main options: -

    1) Leave your pension in the UK

    2) Transfer your pension to a Gibraltar based QROPS

    3) Transfer your pension to a Malta QROPS...

    Leave your pension in the UK

    No UK tax should be due on any payments you receive as a tax resident of Vietnam, assuming the pension is paid in consideration of past employment.  

    This is because there is a double tax agreement (DTA) in place between the UK and Vietnam (see below)...

    The DTA allocates the taxing rights to Vietnam - which in turn can exempt the income from Vietnamese tax.

    But, if your UK pension is a personal scheme, then tax may still be due in the UK.

    In all cases, the pension fund remains exposed to British IHT.

    Transfer your pension to a Gibraltar based QROPS

    As a non-UK resident, if you've lived abroad for more than 5 years and transfer your pension to a Gibraltar QROPS this can remove your UK tax obligation.

    Your pension payment would be subject to tax in Gibraltar at a rate of 2.5%.

    No tax should be due in Vietnam.

    British IHT should not bite either, assuming you're non-UK resident and have been for 5 years+.

    Gibraltar doesn't have death charges.

    Transfer your pension to a Malta QROPS

    As a non-UK resident, if you've lived abroad for more than 5 years and transfer your pension to a Maltese QROPS this can remove your UK tax obligation.

    Your pension payment would be subject to tax in Malta at a rate of up to 35%.

    No tax should generally be due in Vietnam.

    Assuming you're non-UK resident and have been for 5 years+, like Gibraltar there should be no British IHT - and Malta doesn't have death charges.

    Pension tax

    Pension tax if you leave your pension in the UK...

    According to HMRC, you usually have to pay tax on your UK income even if you’re not a UK resident.

    Income includes things like your pension...

    Double tax agreements, where they exist, can prevent you being taxed twice.

    Pension tax if you transfer your pension but were UK resident in one of the previous 5 tax years...

    You usually have to send a Self Assessment tax return if you have a pension outside the UK and you were UK resident in one of the 5 previous tax years.

    DTAs

    UK and Vietnam: double taxation agreement

    Under the DTA between the UK and Vietnam, generally pensions paid in consideration of past employment to a tax resident of Vietnam is not taxed in UK, but only in Vietnam.

    For pension income not paid in consideration of past employment, for example one to which you've contributed yourself, there's the risk that it can be taxable in both the UK and Vietnam.

    Government pensions are different again, so this needs checking if you once servce in the army for example.

    Gibraltar

    Gibraltar QROPS - more detail...

    At the moment there's no Gibraltar/Vietnam DTA, meaning QROPS payments would be taxable in Gibraltar, currently at 2.5%.

    There's no UK income tax if you're non-UK resident (for 5 tax years+, and withdrawals are below £100,000).

    Gibraltar doesn't have death taxes.

    You may be protected from UK IHT.

    You may also benefit from protection from UK death benefit charges if you remain non-UK resident (and non-UK resident for the last 5 years + before payment).

    Malta

    Malta QROPS - more detail...

    At the moment there is no Malta/Vietnam DTA, meaning QROPS payments would be taxable in Malta, currently at rates up to 35%.

    There's no UK income tax if you're non-UK resident (for 5 tax years+, and withdrawals are below £100,000).

    Malta doesn't have death taxes.

    You may be protected from UK IHT.

    You may also benefit from protection from UK death benefit charges if you remain non-UK resident (and non-UK resident for the last 5 years + before payment).

    Death payment

    Pension death benefits payment and UK tax

    Lump sum death benefits paid from a registered pension scheme or non-UK pension scheme are taxed at the recipient's marginal rate of income tax where the owner of the pension rights dies age 75 or over.

    Where the recipient is, for example, a trust or a company and so does not have a marginal rate a 45% charge will apply.

    If the deceased was under the age of 75, these lump sum death benefits are not taxed unless they are paid out more than two years after the scheme administrator became aware of the death.

    For those who are non-UK resident and have a QROPS, the UK tax cost on succession can be less...but take expert advice, don't make any assumptions relating to taxation.

    Tax in Vietnam

    Tax in Vietnam for expats

    Vietnamese residents are taxed on their worldwide income; nonresidents are taxed only on Vietnamese-source income.

    An expat's liability to personal income tax is determined by their residence status.

    You are resident if:

    • If you are present in Vietnam for 183 days or more in a tax (calendar) year, or

    • If you have accommodation to reside permanently in Vietnam, with a term of 183 days or more in a tax year (pre July 2013, it was 90 days).

    Accommodation is very wide in meaning, pretty much anywhere giving you a roof over your head!

    If you, as an expat, are considered to satisfy this rule, but you actually reside in Vietnam for fewer than 183 days in a year and cannot prove that you are a tax resident somewhere else that tax year, you will find yourself resident in Vietnam for tax purposes.

    A non-tax resident of Vietnam is someone not meeting all this and so is not liable to tax except on Vietnam-sourced income.

    Individuals must file separate returns; joint filing is not permitted.

    Employment income is taxed at 5% to 35% for residents, and 20% for non-residents.

    Other income is taxed at 0.1% to 20%.

    Capital gains are taxed at 20%.

    Finally...

    We believe the above taxation information is accurate, however tax rates and rules can change, and we are NOT tax experts. Therefore, please do not rely exclusively on the information to determine your liability for tax.

    Speak to a local tax expert for personalised advice, or consult an international taxation consultancy.

    If you'd like our help with regard to your expat pension options, please get in touch and we will do all we can to help.

    Make smarter, safer decisions for your pensions.

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