QROPS and French Reporting Obligations: The Little-Known Tax Risks for Former UK Residents
Many French nationals who have worked in the United Kingdom have built up retirement savings with British pension funds. On returning to France, they face the question of transferring these savings to a vehicle compatible with UK regulations: the QROPS (Qualifying Recognised Overseas Pension Scheme). Holding such a contract abroad, however, carries reporting obligations in France, the breach of which exposes the holder to significant penalties.
This article presents the QROPS mechanism, the reporting obligations on French tax residents holding such contracts, the tax treatment of withdrawals, and the need to regularise with the assistance of a tax lawyer.
I. What is a QROPS?
The QROPS is a scheme set up by the UK tax authority (HMRC – His Majesty’s Revenue and Customs) in 2006, allowing expatriates who contributed to a UK pension fund to transfer their retirement savings to an approved overseas pension fund, generally domiciled in Malta, Gibraltar or other compliant jurisdictions.
To obtain QROPS status, the non-UK institution must offer a vehicle meeting strict conditions:
• be established in a country with a regulatory framework for pension funds;
• limit lump-sum withdrawals to a maximum of 30%, the balance having to be converted into a life annuity;
• prohibit access to the funds before age 55;
• have a tax regime suited to pension plans;
• be open to residents of the country where it is established.
Since 2016, French retirement products (notably PERPs) have no longer appeared on the HMRC list of eligible schemes. Former UK expatriates therefore have no choice but to transfer their savings to third jurisdictions – most often Malta – through a SIPP (Self-Invested Pension Plan) converted into a Maltese QROPS.
In practice, many French tax residents (formerly UK tax residents) thus hold an investment contract in Malta without being aware of the reporting obligations it entails in France. |
II. The obligation to declare a QROPS in France
Article 1649 AA of the French Tax Code (CGI) imposes a reporting obligation on individuals tax-domiciled in France who take out capitalisation contracts or investments of a similar nature with institutions established outside France. The implementing rules are set out in Article 344 C of Annex III to the CGI.
A Maltese QROPS, as a retirement savings contract taking the form of an investment contract, falls within the scope of this obligation. It is not a bank account within the meaning of Article 1649 A CGI, but a capitalisation contract or investment of a similar nature that must be declared annually on form 3916-BIS attached to the income tax return.
The declaration is due for each contract in force, taken out, amended or terminated during the calendar year, as well as for any partial or full surrender.
III. Penalties for failure to declare
Failure to comply with this reporting obligation exposes the taxpayer to three types of penalty:
1. A fixed fine of €1,500 per contract and per undeclared year (Article 1766 CGI), increased to €10,000 where the contract is held in a State that has not concluded an administrative assistance agreement with France. The fine is due for each non-time-barred year.
2. An 80% surcharge on the tax due (Article 1729-0 A CGI) where the tax authorities reassess income derived from undeclared contracts.
3. A presumption of income (Article 1649 AA, para. 2 CGI) applicable where payments have been made into the undeclared contract, together with a 40% surcharge and late-payment interest.
In addition, the authorities' reassessment period is extended to ten years (Article L. 169, para. 5 of the Tax Procedure Code) where the reporting obligations of Article 1649 AA have not been met, compared with three years under ordinary law.
Illustration: a couple of French tax residents each holding a Maltese QROPS undeclared since 2021 face a fine of €12,000 (2 contracts × 4 years × €1,500), without prejudice to any reassessment of undeclared income. |
IV. Taxation of withdrawals from a QROPS
Withdrawals from a QROPS by a French tax resident constitute foreign-source lump-sum pension benefits, taxable in France under a regime that depends on whether the original contributions were deductible.
France does not assimilate foreign retirement savings contracts to the tax regime of French PERs. A specific regime applies to contracts taken out outside France (Articles 120, 6° bis and 158, 5-b quinquies CGI):
Situation | Initial contributions | Investment income |
Contributions deducted | Pensions (progressive scale) | Pensions (progressive scale) |
Contributions not deducted | Exempt | Investment income (flat tax 12.8% + social contributions 18.6%) |
Summary table – Tax regime applicable to lump-sum withdrawals from foreign contracts
As regards social contributions, the rate applicable since 1 January 2026 is 18.6% (increase in the CSG on capital income under the 2026 Social Security Financing Act), bringing the overall flat tax to 31.4%.
Where the original contributions were not deducted from taxable income, only the investment income is taxable (the difference between the gross withdrawals and the premiums paid). An optional 7.5% final levy exists, but it is reserved for non-split lump-sum withdrawals (Article 163 bis, II CGI), which excludes staggered partial surrenders.
Finally, the application of the bilateral tax treaty (for example, the France–Malta treaty) generally eliminates any risk of double taxation, withdrawals being taxable exclusively in the beneficiary's State of residence, namely France.
V. The need to regularise with the assistance of a lawyer
Voluntary disclosure to the tax authorities is the safest course for the taxpayers concerned. It limits penalties to the fixed fines alone, avoiding the 80% surcharge, which applies only where the reassessment is initiated by the authorities.
The assistance of a tax lawyer is essential for several reasons:
• Legal characterisation of the contract: a QROPS may be characterised as a capitalisation contract, an investment, or even a financial account depending on its features. A mischaracterisation can have major tax consequences.
• Determining the applicable tax regime: taxation depends on whether the original contributions were deductible, on the nature of the withdrawals (lump sum, annuity, early surrenders) and on the applicable tax treaty.
• Securing the procedure: the lawyer's professional secrecy protects the exchanges prior to regularisation. The lawyer drafts the amended returns and handles the dialogue with the authorities.
• Optimising the returns: the lawyer identifies the optional regimes (quotient system, flat tax, tax treaties) that reduce the overall tax burden.
Our firm, specialising in tax law and international taxation, assists former UK expatriates (now French residents) in regularising their QROPS contracts and declaring their foreign-source income in France. Do not hesitate to contact us. |
Eve d’ONORIO di MEO
Lawyer, Certified Specialist in Tax Law
Marseille Bar (France) and Geneva Bar (Switzerland) – EU/EFTA Lawyer
Tel.: +33 (4) 91 15 72 62
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