# Strategic transfer of pension overseas



## SGWidow (6 Dec 2020)

This possibility came up on a different thread (thanks Gordon Gekko) and I don't want to bring that thread off topic.

On the face of it, this seems like an interesting option. Does anyone know where I can get reliable information on this please?

Has anyone actually gone through the process? Are there specialist firm advising on this?


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## Marc (6 Dec 2020)

I transferred my own pension to Malta in January of this year and set out my analysis of the issues here which includes a link to my guide on International Pension transfers from Ireland.









						UK to Ireland Pension Transfers - Everlake
					

This is a detailed analysis of the issues to consider if you live in Ireland and have UK pensions and or a UK National Insurance Number




					globalwealth.ie
				




Marc Westlake CFP*®*, TEP, APFS, EFP ,QFA
CHARTERED, CERTIFIED & EUROPEAN FINANCIAL PLANNER™ professional
AND REGISTERED TRUST & ESTATE PRACTITIONER


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## SGWidow (6 Dec 2020)

Wow - thank you, Marc. I wasn't expecting a reply so quickly  and I seem to have received the a, b, c, d, e and f of all this. Thank you so much. I will try to assimilate all the info over the next while.

Some initial questions....

If I had waived my tax free lump sump from a previous employer in Ireland and I transfer my pension value to Malta, does the prohibition on the tax free lump sum remain?

Another question - how "secure" is Malta - like would my money be safe?

One for the road - in your case, are you saying that if you remain in Ireland and withdraw money from Malta and place it in your UK bank account - then the money has gone full circle except that the once-attaching tax in payment no longer applies so long as you dont bring the money to Ireland?


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## DublinHead54 (7 Dec 2020)

Very Interesting, could you similarly transfer a UK or US pension to Malta? Is there a threshold (pension pot) amount in which you are below you would consider it not worth while to transfer?


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## Marc (8 Dec 2020)

A couple of points here

The transfer must be "“_for *bona fide* reasons and is not primarily for the purpose of circumventing pensions tax legislation and Revenue rules_”.

Surely looking to circumvent a signed lump sum waiver form isn't a bona fide transfer and my firm certainly wouldn't entertain a transfer on that basis.

*Security *

Malta is subject to the same EU regulations as Ireland and therefore isn't less "safe" just because it is further away.
My Pension trustee is part of an international group with 125 offices worldwide and my independent custodian has global client assets in excess of $2 Trillion so, yes, I'd say its secure.

*Residence and Domicile *

Planning (for non-Irish domiciled but Irish resident investors) see here 









						Remittance Basis Guide Remittance Basis Guide
					

The guide aims to summarise the Remittance basis of taxation in Ireland in order to assist our clients to consider the various trade-offs around the taxation of investment funds for non-domiciled investors.  This document has been prepared for information and educational purposes only and should...




					view.joomag.com
				





*How big does your pension need to be?*

No hard and fast rules on this as in all things, it depends on circumstances.


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## Ravima (8 Dec 2020)

Hi Marc,

Is this about transferring a UK pension via IRL to Malta?

Is there anything about transferring Irish DC pot to Malta?


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## Marc (8 Dec 2020)

The guide only deals with the issues associated with an Irish pension to Malta.









						Pension transfers from Ireland International Pension transfers
					

The guide aims to summarise the issues to consider in respect of International Pension transfers from Ireland in order to assist in the consideration of the various trade-offs .  This document has been prepared for information and educational purposes only and should not be relied upon by any...




					joom.ag
				




The U.K. leg is a separate set of issues


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## Ravima (8 Dec 2020)

Ah, I see there is a charge. I get loads of these offers. Thanks anyway. R


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## SGWidow (9 Dec 2020)

Marc said:


> The transfer must be "“_for *bona fide* reasons and is not primarily for the purpose of circumventing pensions tax legislation and Revenue rules_”.
> 
> Surely looking to circumvent a signed lump sum waiver form isn't a bona fide transfer and my firm certainly wouldn't entertain a transfer on that basis.



Having read the material and reflected on what's really happening, I must admit feeling somewhat uncomfortable with the ethics of all this. Just to tease it out further....

Take someone who transfers from an occupation pension scheme (with an attaching waiver and less than 15 years service) to a PRSA - are you saying that your firm would not facilitate such a transfer? It amounts to the same thing.

Also, a key driver of off shore transfers will be to arrange one's affairs in a way that minimises tax. This is the essence of the example on your website where the rationale given for moving to Malta is to save tax in drawdown and save tax at retirement by not-exceeding allowable pension thresholds.

It seems strange to me that certain forms of circumvention are deemed appropriate to you and other forms not deemed acceptable. In relation to the example quoted, the bona fide reason could reasonably be to avoid imputed distribution. The tax free lump sum bit could be deemed secondary.


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## Dave Vanian (9 Dec 2020)

Marc said:


> The transfer must be "“_for *bona fide* reasons and is not primarily for the purpose of circumventing pensions tax legislation and Revenue rules_”.
> 
> Surely looking to circumvent a signed lump sum waiver form isn't a bona fide transfer and my firm certainly wouldn't entertain a transfer on that basis.



Assuming that I have no wish to live anywhere but Ireland, could you think of any bona fide reasons to transfer my pension fund to Malta that your firm would entertain?


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## sunnyside (14 Jan 2021)

Hi

Has anyone any more information on this ? It seems to becoming a legitimate option for firms to be advising clients to do it.


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## sunnyside (5 Apr 2021)

Morning. Just giving this a bump to see if anyone has any views on this topic of whether Malta is a legitimate and legal route for people to go down for their pensions at retirement  ? Tks


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## Marc (5 Apr 2021)

I’ll just repost this key point 

The transfer must be "“_for bona fide reasons and is not primarily for the purpose of circumventing pensions tax legislation and Revenue rules_”.


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## sunnyside (5 Apr 2021)

Tks for that. Then I can’t see how Irish companies are offering this service to clients in Ireland who are remaining living in Ireland.
Surely the only reason people do it is to gain an advantage- a tax saving advantage or to be able to use the more favourable Malta rules around pensions.


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## Marc (5 Apr 2021)

It’s a great observation.

We spoke with a leading tax consultant on this subject and they agreed that anyone facilitating a transfer which is immediately retired is most likely going to fail that test comprehensively.

But I’m 51 my family all live in the U.K. can you tell me where I’m going to retire?

And remember that the landmark O’Sullivan case turned on arguments that the client, an accountant, didn’t want to keep his capital in Ireland due to the economic concerns.

“there is no statutory basis where provision of details in respect of residency or employment is a prerequisite for arranging an overseas transfer of a PRSA scheme. The plaintiff chose not to proceed with the transfer of his fund to Cyprus because of an unstable economic climate. He favours moving the fund to Malta for that same reason.”


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## Conan (5 Apr 2021)

Marc,
So for an Irish resident who has no specific plans to retire overseas, what might be a “bona fide” reason to transfer one’s pension to Malta (if not for the purpose of circumventing tax or Revenue regulations).? You have referred to “bona fide reasons” a number of times, but have failed to give examples.


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## Marc (5 Apr 2021)

There is a specific example referred to in the OSullivan case in my post above

Revenue has not issued any guidance as to what constitutes a _bona fide_ transfer.

“_The bona fide condition was introduced in 2009 in a bid to stop PRSAs being used to facilitate 'artificial' transfers of occupational pension schemes outside of Ireland and back again. In 2012 the Revenue Commissioners were advised by the pensions industry that many requests for transfer of pension schemes overseas were in response to advertising by international scheme providers in Ireland. These schemes sometimes work by way of a "dual transfer" - an individual's pension fund is transferred to an overseas arrangement which meets the requirements of S.I. No. 716/2003, whereby it is then immediately transferred to another jurisdiction to allow for easier access to the funds.

The increase in overseas transfers raised concerns concerning the potential flight of pension funds out of the country, the risk to the pension holders and an undermining of the primary purpose of tax relief for pensions, i.e., to encourage individuals to save for retirement. This supposes that pension funds are 'locked away' and not accessible until retirement. The Revenue, as part of the reforms under the 2012 circular, introduced the requirement to include a signed declaration that the transfer being sought was bona fides. It is the Revenue Commissioner's position that the inclusion of this declaration by the PRSA holder is not conclusive evidence of bona fides. The PRSA provider can still make further enquiries to assess the validity of the proposed transfer and is under no obligation to "blindly accept a signed declaration" as the only evidence_.”


_"A member of an occupational pensions scheme or a PRSA contributor who directs the trustees of the scheme or the PRSA provider to make a payment to, or transfer assets to, an arrangement for the provision of retirement benefits outside the State (i.e. an overseas arrangement) under the provisions of the Occupational Pensions Scheme and Personal Retirement Savings Accounts (Overseas Transfer Payments) Regulations 2003 (S.I. No. 716 of 2003) shall, prior to any transfer, sign a declaration, in such form to be determined by the Revenue Commissioners, to the effect that the transfer conforms to the requirements of the regulations and Revenue pension rules, is for bona fide reasons and is not primarily for the purpose of circumventing pension tax legislation and Revenue rules._"

From the Judge’s summary

_“I do not think that the defendant (the pension trustee) is under an obligation to engage in an investigation of the motives of the plaintiff. Provided there is nothing in the facts of the case as presented to the company to give rise to suspicion as to the bona fides of the transaction, the defendant company is free to implement the wishes of the owner of the fund. Having said that, I am not sure that it is possible to lay down a general rule. Everything depends on the circumstances of the particular case. It is sufficient to say that in this case there appears to be no basis for questioning the motives of the applicant and that his declaration in the approved form is therefore sufficient. The defendant company does not have any reason to be uneasy and is not required to verify the factual circumstances behind the application or to make some general exploration of the applicant's motives. This condition is not accordingly a legitimate ground of refusal._”


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## sunnyside (5 Apr 2021)

Tks for all that information but I’m struggling to see what the bona fide reason was in that case or indeed would be for those of us would like to avail of this option.


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## Marc (5 Apr 2021)

The key line from the Judge’s discussion

“ I  am not sure that it is possible to lay down a general rule. Everything depends on the circumstances of the particular case.”

It’s therefore clearly only possible to examine each case in its merit which is exactly what we do for our clients.


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## Early Riser (5 Apr 2021)

Perhaps there is a fine line between "a _bona fine_ reason" and "a difficult to prove this is not a _bone fide_ reason".

Or, at least, the perception of a fine line.


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## time to plan (5 Apr 2021)

My difficulty with this approach is that it seems to be dependent on my claiming that I am not domiciled In Ireland - like Marc I am British and spend most of my life in the UK. Now I may be able to defend a claim that I am not domiciled in Ireland but it doesn’t sit right with me.


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## Marc (5 Apr 2021)

One of my first clients early in my career was a Labour MP who didn’t “believe” in the Stockmarket. That didn’t make it any less valid for me to invest in the Stockmarket.

And I think it’s important to stress that the commission for taxation when looking at the question of domicile described the situation as “anachronistic” 

But the fact remains that the precedent is there for those that simply choose to avail of it 

"_No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer's pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue.”_

Lord Clyde in the case of Ayrshire Pullman Motor Services v Inland Revenue [1929] 14 Tax Case 754, at 763,764:

Tax considerations are often a matter of personal choice.

We often talk about “claiming our allowances” and we know that many people fail to do so.

Often that is simply down to a failure to seek timely professional advice. Here the role of the professional and the personal values of an investor need to be aligned.

As professional advisers we are bound to excercise a fiduciary duty to our clients and to always act in their best interest.

In a self-assessment tax system like Ireland the professional adviser provides guidance so that things “sit right” with investors but at the end of the day it is ultimately the taxpayer who signs the declaration.

Speaking as an expert in the subject, it is a matter of undeniable and categoric fact that @time to plan had a U.K. domicile of origin just as my children who were born in the Rotunda and have Irish passports have a U.K. domicile as they take the domicile of their Father.

However, over time it is necessary to assess  if a taxpayer has actively taken steps to give up their Domicile of origin and acquire a domicile of choice. So again, professional advice is a necessary condition of an answer at a point in time.

But leaving all that aside, the O’Sullivan case established that it is not necessary for a taxpayer to move themselves out of Ireland in order to legitimately move one’s pension.


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## sunnyside (5 Apr 2021)

But if you are domiciled in Ireland and dealing with the revenue commissions here and wish to retire and continue to live in Ireland - I can’t see how one can shift their pension to Malta.

As Conan asks - what might be a bona fide reason ? I can’t think of one....

I do believe if you are going to leave Ireland and retire overseas then Malta is an option for your pension.

But if you wish to stay in Ireland I can’t seem to find a reason as to why you’d be allowed.

Prehaps Marc doesn’t want to give away his knowledge for free - and that’s understandable- but you might confirm Marc if it is possible to retire in Ireland , live in Ireland but have your pension in Malta. Thank you.


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## Marc (5 Apr 2021)

Yes, its absolutely possible to retire in Ireland, be Irish Resident and Irish Domiciled and move your pension to Malta. These principles are enshrined at an EU level under the free movement of capital.


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## Conan (5 Apr 2021)

Marc said:


> Yes, its absolutely possible to retire in Ireland, be Irish Resident and Irish Domiciled and move your pension to Malta. These principles are enshrined at an EU level under the free movement of capital.


Marc, you seem to be suggesting that so long as a provider believes that the client has not got an “un-bona fide” reason to transfer, then it’s ok. Seems like trying to prove a negative. 
I have seen some “advisors” in this space advocating a move to the likes of Malta on the basis that one can access 30% as a tax free lump sum (rather than 25% in Ireland) or that you can access funds from age 50. 
So “bona fide” reasons seems to be in the eye of the beholder. If I believe it is “bona fide”, it is?


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## Early Riser (5 Apr 2021)

Conan said:


> So “bona fide” reasons seems to be in the eye of the beholder. If I believe it is “bona fide”, it is?



Or perhaps you would just have to say/declare it to be "bone fide", whether you really believe it or not? As long as no one asks any probing questions?


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## Marc (5 Apr 2021)

No, I’m subtly suggesting that many firms in Ireland are happy to facilitate a transfer which we wouldn’t touch with a barge pole.

let me give an example 

We recently consulted with an Irish client who had been working in the U.K. with a U.K. pension.

We arranged a transfer to Malta and a PCLS but the client was advised to only take 25% which is consistent with the U.K. rules.

If a broker is selling the tax advantages over bona Fide reasons to transfer then I think we are right to be sceptical


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## time to plan (5 Apr 2021)

Marc said:


> One of my first clients early in my career was a Labour MP who didn’t “believe” in the Stockmarket. That didn’t make it any less valid for me to invest in the Stockmarket.
> 
> "_No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer's pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue.”_
> 
> ...


I suspect there isn’t really a definitive answer on domicile, just a defensible position. As for Lord Clyde, I have heard him quoted many times over the years in the UK by people who now find themselves in very sticky positions over Loan Schemes they participated in as IT contractors. It’s a complex area, but one thing I am certain of is that there is no real certainty or definitive position.


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## bish123 (28 May 2021)

Is it possible to transfer a part of pension pot to Malta or Portugal and keep rest in Ireland. For instance, I have around 200k sitting in occupational pension scheme from previous employment. Can I transfer that fund to a scheme overseas, draw down lump sum after 50,  buy apartment and use rest to support my stay there for 2-3 months every year. Meanwhile, I can build up my pension in current scheme that will stay in Ireland.


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