For many British expats living in France, managing a UK pension can seem confusing. Many British expatriates, including UK expats and UK expatriates, face challenges managing their pensions when moving to France. You may have heard about a QROPS (Qualifying Recognised Overseas Pension Scheme) and wondered if it could help you take control of your retirement savings abroad. However, France does not currently have any HMRC-approved QROPS. That does not mean you are without options. In fact, the International SIPP often provides a more flexible and transparent alternative for those residing in France. Some EU based QROPS, such as those in Malta, are available to UK pension holders, but not in France.
This guide explains what QROPS are, why they are not available in France, and how you can still manage your UK pension efficiently while living in France.
Introduction to Overseas Pension Schemes
Overseas pension schemes, such as Qualifying Recognised Overseas Pension Schemes (QROPS), are designed to give UK nationals and British expatriates greater flexibility in managing their pension savings when they retire abroad. These pension schemes allow individuals to transfer their UK pension savings to an overseas arrangement, potentially unlocking tax benefits and enabling more tailored pension planning. For those considering retirement in France, understanding how overseas pension schemes work is essential for making informed decisions about pension income and long-term financial security. A qualifying recognised overseas pension can help align your pension structure with both UK and French tax laws, offering advantages in estate planning and income management. However, the rules governing overseas pension schemes are complex, and both UK and French regulations must be considered. To ensure you make the most of your pension savings and remain compliant, it is vital to seek professional advice before making any decisions about transferring your UK pension or choosing the right pension scheme for your needs.
What is a qualifying recognised overseas pension (QROPS)?
A QROPS is an overseas pension scheme that meets specific HMRC conditions and reporting requirements. It allows UK pension holders who have moved abroad to transfer their pension to a qualifying overseas plan without triggering an unauthorised payment charge. QROPS providers are typically based in jurisdictions like Malta or Gibraltar, and choosing a reputable provider is crucial due to differences in costs, risks, and regulatory oversight.
QROPS were designed primarily for those who plan to retire outside the UK permanently, particularly in jurisdictions with favourable tax and regulatory environments such as Malta or Gibraltar. QROPS transfers allow for flexible access to pension funds, enabling lump sum withdrawals, regular payments, or a combination of both, depending on the provider and jurisdiction.
Does France have QROPS?
No, France does not have any QROPS approved by HMRC. The last French QROPS were delisted several years ago when new reporting rules and stricter compliance standards were introduced. Since then, no French pension provider has maintained the necessary status to appear on HMRC’s QROPS list. French schemes, such as the PER, do not meet the required UK pension rules for QROPS status.
This means you cannot directly transfer a UK pension into a French pension scheme without losing HMRC recognition and potentially incurring severe tax penalties. The lack of HMRC recognition is because French schemes do not align with the required UK pension rules.
Why QROPS are not available in France
There are two main reasons why QROPS are unavailable in France:
- Tax and regulatory structure – French pension products operate under different tax and reporting frameworks than those required by HM Revenue & Customs (HMRC), making them incompatible with HMRC’s requirements.
- EU and UK divergence post-Brexit – Following Brexit, the divergence between UK jurisdiction and EU regulations has made compliance more difficult for French providers. French pension providers would need to undertake significant compliance steps to maintain QROPS status, which has not proven commercially viable.
Alternatives to QROPS in France
Although QROPS in France are no longer available, there are high-quality alternatives that allow British expats to manage their retirement savings efficiently. These alternatives are particularly relevant for any UK expat or non UK residents living in France.
1. The International SIPP
The International SIPP (Self-Invested Personal Pension) is often the most suitable solution for British expats in France. It is a UK-regulated pension structure that allows you to hold and manage your pension while living abroad, with the following advantages:
- HMRC-regulated and fully compliant
- No overseas transfer charge for most French residents
- Access to global investments in multiple currencies
- Flexible drawdown options for retirement income
- Transparent fee structures and portability if you move again
- Manage your entire pension pot flexibly from abroad
An International SIPP keeps your pension within the UK’s trusted regulatory system while giving you the flexibility of international investment and management.
Before transferring your pension pot to an International SIPP, it is recommended to seek regulated advice to ensure your best interests are protected and all legal requirements are met.
2. French Assurance Vie
For residents who want a local investment structure alongside their UK pension, Assurance Vie is a popular French life-insurance-based investment product. Assurance vie policies are widely used by French residents for their tax deferral benefits and estate planning advantages, especially when held for more than eight years. It offers tax advantages on withdrawals after eight years and can be a useful complement to an International SIPP, particularly for estate planning and income management in euros.
Lifetime Allowance and QROPS
The Lifetime Allowance (LTA) is a cap set by the UK government on the total amount of pension savings you can accumulate in UK pension schemes without facing additional tax charges. If your UK pension savings exceed the LTA, you could face tax charges of up to 55% on the excess amount, significantly reducing your retirement income. For higher earners or those with multiple pension pots, this can be a major concern. One of the key attractions of transferring a pension to a QROPS is that, once the transfer is complete, your pension savings are no longer subject to the UK Lifetime Allowance. This means your pension can grow without the risk of breaching the LTA and incurring punitive tax charges. However, transferring your pension to a QROPS is a significant financial decision with important tax implications, both in the UK and in your country of residence. It is essential to consult a qualified financial adviser to assess whether a QROPS transfer is the best option for your circumstances and to ensure your pension planning remains tax-efficient and compliant.
Overseas Transfer Charge (OTC)
The Overseas Transfer Charge (OTC) is a 25% tax charge that can apply when transferring UK pension funds to certain overseas pension schemes. However, for French residents, there are specific exemptions that may allow you to avoid this charge. The OTC does not apply if your QROPS is based within the European Economic Area (EEA) and you are resident in the same country as the QROPS, or if both the QROPS and your country of residence are within the EEA. While there are currently no registered QROPS in France, understanding the OTC rules is crucial for anyone considering a pension transfer to an overseas scheme. Failing to comply with these rules can result in a significant tax liability. To ensure you benefit from any available exemptions and avoid unexpected charges, it is highly recommended to seek professional advice before proceeding with any overseas transfer of your pension.
Comparing QROPS and International SIPP
| Feature | QROPS | International SIPP |
|---|---|---|
| Regulated by HMRC | Not if outside approved list | Yes |
| Available in France | No | Yes |
| Tax benefits | Jurisdiction-dependent | UK regulated, transparent |
| Reporting to HMRC | Required | Automatic compliance |
| Best suited for | Permanent relocation to approved jurisdictions | Expats living in France or EU countries |
Both QROPS and International SIPP are options for those with UK registered pension schemes, such as occupational pensions or SIPPs, who are considering transferring their pensions abroad.
Note: Pension rules differ between the UK and France, which can affect your transfer options, access age, and tax implications. Additionally, the overseas transfer allowance may apply to large pension transfers, potentially resulting in a 25% charge on certain transfers out of the UK.
In most cases, a well-structured International SIPP provides the same international flexibility as a QROPS without the risk of HMRC penalties or the complexity of offshore jurisdictions.
How to manage your UK pension from France
If you live in France and hold one or more UK pensions, here are the key steps to consider:
- Get professional advice from an experienced international financial adviser understanding cross-border pensions.
- Review all your UK pension schemes to understand fees, performance, and options.
- Evaluate whether an International SIPP aligns with your goals for flexibility, cost efficiency, and long-term tax strategy.
- Set up a French bank account to receive pension payments efficiently and manage currency exchange.
- Consider local investment options like Assurance Vie for euro-denominated savings.
- Be aware that money paid during a pension transfer may be subject to charges or taxes, including possible OTC charges, so review all costs before proceeding.
- Note that you may need to pay tax on pension income received in France, depending on your residency status and applicable tax treaties.
- Pensions can sometimes be inherited pension tax free if certain conditions are met, so consider estate planning to maximize tax benefits.
- Ensure ongoing reporting compliance in both the UK and France to avoid double taxation.
Double taxation and the UK–France Tax Treaty
One of the key concerns for expats is taxation. The UK–France Double Taxation Treaty ensures that pension income is not taxed twice. Generally, private pension income is taxable only in France once you are a French resident. However, UK tax laws may still apply to certain pensions, such as government or civil service pensions, even if you are a French resident.
A professional adviser can help you structure withdrawals efficiently to remain compliant while minimising your tax burden.
FAQs – QROPS in France
1. Can I transfer my UK pension to France?
No, you cannot transfer a UK pension into a French pension plan, as there are no HMRC-approved QROPS in France. However, you can transfer your pension into an International SIPP.
2. Is a QROPS a good idea for someone in France?
For most residents of France, no. Since QROPS are not available locally, and other jurisdictions may trigger overseas transfer charges, the International SIPP is usually more efficient.
3. What is the five-year rule for QROPS?
If you transfer to a QROPS, HMRC can still tax withdrawals for up to five full tax years after you become a non-UK resident. The rule ensures continued oversight for recent emigrants.
4. Are UK pensions taxable in France?
Yes, private pensions are typically taxable in France once you are a French tax resident, but the UK–France Tax Treaty helps prevent double taxation.
5. What happens if I move back to the UK?
If you hold an International SIPP, it remains a UK pension, so you can continue managing it seamlessly upon your return.
6. Can I take my pension as a lump sum, and what are the tax implications?
Yes, you can usually take part or all of your pension as a lump sum. The tax treatment depends on your residency and the type of pension. For example, with a UK pension scheme, up to 25% may be tax-free in the UK, but French tax rules will apply if you are resident in France.
7. What are the risks of unregulated investments in overseas pension transfers?
Transferring your pension overseas can expose you to unregulated investments, which may lack proper oversight and increase the risk of losses or inaccessible funds. Always check the regulatory status of any investment before proceeding.
8. Are QROPS or International SIPP protected by the financial services compensation scheme?
International SIPPs are UK pension schemes and may be protected by the Financial Services Compensation Scheme (FSCS) if the provider is UK-regulated. QROPS, being based overseas, are not covered by the FSCS, so you do not have the same level of protection.
9. Which types of UK pension scheme can be transferred to QROPS or International SIPP?
Most defined contribution UK pension schemes and some defined benefit schemes can be transferred to a QROPS or International SIPP, subject to scheme rules and UK regulations.
10. How does transferring a pension affect UK inheritance tax liabilities?
Transferring your pension to a QROPS or International SIPP can help with UK inheritance tax (IHT) planning. Pension funds held in these schemes are usually outside your estate for UK IHT purposes, potentially reducing the tax liability for your beneficiaries.
Take control of your UK pension from France
Although QROPS in France are no longer an option, British expats can still benefit from flexible, compliant, and cost-effective pension solutions. The International SIPP provides access to professional advice, investment freedom, and the reassurance of UK regulation while living abroad.
If you are a British expat in France exploring your pension options, speak with a Harrison Brook adviser today. Our international financial planners specialise in cross-border pension advice for expats across Europe and beyond.
