Pension transfer · 2026 sourced

QROPS vs International SIPP for British expats in 2026

For two decades the QROPS was the default cross-border pension structure for British expats. The October 2024 rule change broke that assumption hard. For most British movers to Spain or Portugal in 2026, the International SIPP is now the better answer; QROPS still works for Gibraltar Cat 2 holders. This is the sourced version of the decision, including the 25% transfer charge mechanics, the OTA cap, and the specific country-by-country answer.

By Dominic RoworthReviewed 25 May 2026Educational — not regulated pension advice

The TL;DR

Spain / Portugal: International SIPP usually wins. The 25% overseas transfer charge applies to QROPS unless the QROPS is in the same country as your residence — almost no British movers satisfy that for Iberia in 2026. Gibraltar: Gibraltar QROPS remains viable for Gibraltar residents (Cat 2 / HEPSS). Frontier workers (Spain-side residence, Gibraltar work): SIPP usually wins because Spanish residence breaks the Gibraltar QROPS exemption.

What changed on 30 October 2024

Until 30 October 2024, transfers to a QROPS established in the EEA or Gibraltar were exempt from the 25% overseas transfer charge provided the member was resident anywhere in the EEA. This meant a British expat in Spain could transfer to a Malta QROPS (Malta being an EEA member with a deep QROPS market) and pay no transfer charge.

HMRC tightened the rule via the Autumn Statement 2024 measures: from 30 October 2024, the exemption only applies if the QROPS is established in the same country as the member's residence. A British expat in Spain transferring to a Malta QROPS now triggers the 25% charge. To avoid the charge, the QROPS must be Spanish — and the Spanish QROPS market is tiny.

This rule change was the single most disruptive event in UK expat pension planning since the 2017 OTC introduction. It made the QROPS route effectively unavailable for most British movers to Spain and Portugal unless they could find a same-country QROPS — which most cannot.

The International SIPP: the new default

An International SIPP is a UK-registered Self-Invested Personal Pension provided by UK pension administrators for non-UK residents. The pension stays inside the UK pension regime — no overseas transfer happens, so no 25% charge applies.

What you keep:

UK FCA-regulated pension structure
UK Pension Protection Fund coverage (where applicable)
Tax-free 25% lump sum option (subject to LSDBA limits)
Investment flexibility — equities, funds, ETFs, multi-currency holdings
Ability to pay benefits in EUR, GBP or other currencies
UK income tax treatment on withdrawals (with DTA credit relief abroad)

What you accept:

UK pension rules including the MPAA (Money Purchase Annual Allowance) if you've already drawn flexibly
Withdrawals reportable in both UK and your new country of residence (treaty resolves the overlap)
Provider charges typically 0.5%-1.5% per year all-in, with platform + adviser layers

When QROPS still makes sense

Three narrow cases where QROPS still wins:

Gibraltar resident (Cat 2 / HEPSS / ordinary). Gibraltar QROPS in Gibraltar = same-country residence = no 25% charge. Gibraltar's tax position on pension withdrawals (a flat 2.5% if structured correctly) makes this potentially very attractive for HNW Cat 2 holders.
Non-EEA destinations. If you're moving outside Europe (Australia, New Zealand, US, etc.), the country-match rule still applies but the maths and the broader retirement planning can favour QROPS in some scenarios. Out of scope for this Iberia-focused page.
Specific employer/public-service exemptions. Some defined-benefit transfers via employer arrangements retain QROPS exemptions even cross-border. Niche; check with the scheme.

The country-by-country answer

Spain

Default: International SIPP. QROPS market in Spain is tiny; Malta QROPS triggers the 25% charge post-Oct 2024. Beckham Law can shield non-Spanish-source income, including potentially UK pension income — talk to a regulated cross-border adviser. Wealth tax (Patrimonio) may apply to the pension value depending on region and balance — see the Patrimonio deep dive.

Portugal

Default: International SIPP. Same reasoning — Portuguese QROPS market is small, Malta QROPS now triggers the charge. IFICI (NHR 2.0) does NOT shield pension income, so pension withdrawals are taxed at standard Portuguese IRS rates. Standard rates climb to 48% above €83,696/yr — pension drawdown sequencing matters more in Portugal than it used to under the old NHR.

Gibraltar

QROPS or SIPP both work. Gibraltar QROPS for Gibraltar residents avoids the 25% charge and benefits from local pension tax efficiency. For Cat 2 holders, this often beats SIPP on net retirement income. The Gibraltar QROPS market is mature — multiple providers, well-understood by UK advisers familiar with the Rock.

Frontier workers

Default: International SIPP. Spain-side residence breaks the Gibraltar QROPS exemption (you're not resident in Gibraltar). Unless you shift to full Gibraltar Cat 2 residency, SIPP is the answer.

Mistakes that cost the most

Transferring to Malta QROPS post-30-October-2024 without checking residency. Triggers 25% on the whole transfer value. A £400k pension becomes £300k overnight.
Drawing a flexible UK pension before becoming non-UK-resident. Triggers the MPAA, reducing your annual pension contribution allowance permanently. Sequence the move before any drawdown.
Forgetting UK government pension special treatment. NHS, civil service, military, certain teachers' pensions stay UK-taxed under Article 17 of the UK-Spain DTA / Article 19 of the UK-Portugal DTA. Don't accidentally re-route those.
Buying a QROPS just before moving to qualify for the old EEA exemption. The rule change was 30 October 2024. Anti-forestalling provisions catch transfers initiated in anticipation of the new rules.
Assuming Beckham Law shields pension income automatically. Pension structuring inside Beckham Law works but requires deliberate setup. Default treatment isn't automatic.

FAQ

A 25% tax HMRC applies to UK pension transfers to a QROPS unless an exemption applies. Pre-October 2024, the main exemption was: QROPS in the EEA or Gibraltar and you reside in the EEA. From 30 October 2024, that exemption was tightened — you now need to be resident in the same country as the QROPS, not just anywhere in the EEA. That single rule change closed the most-used route for British expats in Spain/Portugal who were transferring to Malta-based or Gibraltar-based QROPS.

A lifetime cap on transfers you can make to a QROPS without triggering the 25% charge. The OTA is set at the same level as your Lump Sum and Death Benefit Allowance (LSDBA), which is £1,073,100 by default (subject to transitional protections). Transfers above the OTA face the 25% charge on the excess. For most UK movers this isn't the binding constraint — the residency-match rule is.

Only if the QROPS is established in the same country you live in. Spain has very few HMRC-registered QROPS providers; Portugal has more but the market is small. Most UK advisers route Spain/Portugal expat QROPS transfers to Malta — which since 30 October 2024 triggers the 25% charge unless you also reside in Malta. The practical answer for most British movers in Iberia is: the QROPS route is now expensive or unavailable, and the International SIPP route is the new default.

A UK-registered SIPP (Self-Invested Personal Pension) designed for use by non-UK residents. Your pension stays on the UK regulatory regime — no 25% transfer charge, no QROPS list complexity, no overseas residency-match rule. You keep UK FCA protection, UK consumer regulation, UK tax treatment on the pension wrapper. The trade-off is you remain inside the UK pension framework with its withdrawal rules (MPAA, LTA-related caps where applicable) but you can hold international investments and the SIPP can pay you in EUR, GBP or other currencies.

Generally yes — once you're tax resident in the new country, pension income from a UK SIPP or QROPS is reportable locally and taxed under local rules. The exception is UK government pensions (civil service, military, NHS-employed): under most UK Double Tax Treaties (including Spain Article 17, Portugal Article 19), government pensions are taxable only in the UK. Private and state pensions are taxed in the new country of residence, with the UK potentially withholding and the treaty resolving overlap via credits.

Gibraltar QROPS remain a viable option if you're resident in Gibraltar. The Gibraltar QROPS market is more developed than Spain's and the regulatory framework is well understood by UK advisers. For a Cat 2 holder living in Gibraltar, a Gibraltar QROPS can produce tax-efficient retirement income without triggering the 25% charge. For someone living in Spain on a frontier-worker basis, the QROPS is in the wrong country and the charge applies — making the International SIPP usually the better answer.

Both countries treat UK pension withdrawals as taxable income under their domestic regimes. Beckham Law in Spain can shield non-Spanish-source income for the regime period, which can include UK pension income provided structuring is correct — talk to a regulated cross-border adviser, the playbook walks through this. Portugal's IFICI does not protect pension income — pension taxation is at standard Portuguese rates. This is one reason Portugal is no longer the no-brainer it was under the original NHR.

Primary sources

This page is educational content and not regulated pension advice for your specific situation. Cross-border pension structuring decisions should be made with an FCA-regulated adviser who holds the relevant pension-transfer authorisation.