On October 30th last, Revenue issued a statement on overseas pension transfers. The matter received media attention earlier this year when a client won the right in the High Court, to transfer his PRSA fund to Malta, even though he was living and working in Ireland.
The statement noted that ‘Moving pension funds offshore in an effort to circumvent pension tax legislation (particularly, the condition that a scheme must be set up for the sole purpose of providing relevant benefits, within the meaning of the Irish tax legislation), may fall foul of the conditions under which the scheme was approved by the Revenue Commissioners as an exempt approved scheme and could result in the withdrawal of the approval of an occupational pension scheme….or PRSA… Any such approval could trigger significant tax liabilities on the sums moved offshore and the withdrawal or claw back of tax reliefs.’ It also states that, ‘depending on the circumstances, the transaction may be regarded as a tax avoidance transaction…’
This statement did not signify a change in Revenue policy or position in relation to overseas pension transfers. We continue to see agencies advertise and promote their ability to transfer a pension fund overseas to ‘unlock’ a portion of the fund tax free. We would urge all pension investors who have made contact with such agencies to exercise extreme caution on the matter. The item remains firmly on the agenda of the Revenue Commissioners who have brought the matter to the attention of the pensions industry. Metis Ireland are not tax advisors and as such we would strongly advise those who are considering this course of action, to seek independent tax and legal advice.
They may reissue this statement as a general press release so it is likely to get further attention in the media over the coming weeks.