Hong Kong is now becoming a more popular place for British expats looking to move their pension out of the UK tax net. Hong Kong is becoming particularly for high net worth British expats living in Asia and Asians returning from the UK, especially as there is zero tax at source, compared to Gibraltar which charges 2.5% income tax at source, Malta which faces up to 35% income tax if no DTA is available and the Isle of Man which has a 20% income tax if no DTA is available.
A Hong Kong faces zero tax at source in HK and Hong Kong has many Double Taxation Agreements which often gives the taxing rights to Hong Kong.
A ROPS in Hong Kong faces no tax on income in HK and no tax on death. It eliminates taxation in the UK as long as you remain tax resident abroad.
A ROPS in Hong Kong allows 25% tax-free lump sum, also known as the Pension Commencement Lump Sum (PCLS). Further drawdowns are also available.
Austria, Belgium, Brunei, Canada, China, Czechoslovakia, France, Guernsey, Hungary, Indonesia, Ireland, Italy, Japan, Jersey, Korea, Kuwait, Liechtenstein, Luxembourg, Malaysia, Malta, Mexico, Netherlands, New Zealand, Portugal, Qatar, South Africa, Spain, Switzerland, Thailand, UAE and the United Kingdom all have Double Taxation Agreements with Hong Kong.
However, some of these countries are taxed in their country of residence rather than Hong Kong despite the existence of a DTA: Italy, Japan, Portugal, Spain and New Zealand are all taxed in their countries by their local tax authorities on retirement income remitted.
The UK also re-wrote their tax rules in 2011, so that offshore pension schemes, such as in Hong Kong are taxed on income in the UK if you are tax resident in the UK. However, as long as you remain tax resident outside the UK, your HK pension will have no tax on income, growth or death in HK. You can read the Finance Bill here.
Hong Kong does not have a Double Taxation Agreement with the USA, however pensions in Hong Kong are not taxed on income, growth or death as long as you remain a resident outside Hong Kong.
Furthermore, a Hong Kong ROPS is not vested, so it may be a suitable overseas pension scheme for residents in the USA. UK pension transfers to a 401k or Roth IRA are not allowed by the American tax authority, the Inland Revenue Service (IRS). However, you can move your UK pension to Hong Kong. This will get your pension out of the UK tax net. You may then only pay income tax on the pension at retirement in the USA, but you would need to seek advice from an American tax attorney. You would need a ruling from the IRS and at present it is not clear how income would be taxed at retirement if you became tax resident in the USA in the future and started drawing income in the USA at retirement.
Click here for the latest Hong Kong ROPS list.
Transfer Value Greater than £70,000 Less than £70,000
Transfer from UK Scheme £695 set up fee + £995 p.a. £345 set up fee + £345 p.a.
Transfer from Existing QROPS £495 set up fee + £995 p.a. £345 setup fee + £345 p.a.
There is an extra fee of £295 for each additional pension transfer into a Hong Kong ROPS. The fees change often as we work with various companies who run promotions every so often, so please email us for the latest fees, they may be lower or higher than quoted.
Please email us today for the best Hong ROPS quotes and a free pension transfer analsyis.