ROPS Spain
Hundreds of British residents retire each year to Spain to enjoy the climate, cheaper cost of living, and healthier lifestyle among other benefits. Few are aware that the country can also save them thousands of pounds in British tax charges – depending on the size of their pensions. All they need to do is register for the Recognized Overseas Pension Scheme (ROPS), which allows them to transfer their British pensions to their new country. Read more below on ROPS Spain.
How do I get a ROPS in Spain?
Since Spain doesn’t acknowledge trust structures (which is necessary for the country to accept UK pensions), your best option is to register in Malta where trustees who provide ROPS have to undergo thorough investigation by the Malta Financial Services Authority (MFSA).
What are my ROPS benefits?
A ROPS in Spain gives you the following:
* You get a larger tax-free lump sum at 30% rather than the 25% in Britain
* You have wider investment choices that include mutual funds, ETFs, banknotes, bond funds, and so forth.
* You can pass on 100% of your funds to your beneficiaries upon your death, called Pension Commencement Lump Sum (PCLS).
* Upon your retirement, you pay Spain’s income tax – which is far lower than British tax deductions.
* You can transfer to the EUR to avoid currency fluctuations
* Protection of assets from creditors or divorce. It is harder for UK creditors to seize assets in a ROPS than they could in a normal UK pension.
* You receive unlimited lifetime allowance. In the UK, your Lifetime Allowance would be capped at 1.25 million GBP.
How do I apply for ROPS in Spain? Only consider opening a ROPS in Spain if you’re planning to live there for at least five years, are 55 or older, and have at least £20,000 in this pension account. You need to obtain a certificate, called certificado de residencia fiscal EN–España Convenio, showing that you are resident in Spain and paying taxes there. As foreigner living in Spain, you also have to provide the Spanish Tax Office with a summary of your PCLS and your domestic or international assets that are valued over EUR 50,000, since this is taxable.