Italy continues to attract UK expats seeking a Mediterranean lifestyle, competitive living costs, and appealing retirement opportunities. But when it comes to transferring a UK pension to a Qualifying Recognised Overseas Pension Scheme (QROPS), Italy presents a specific challenge: no pension schemes based in Italy are currently listed on HMRC’s approved QROPS register.
In this guide, we explain what this means for UK expats, clarify the rules around QROPS in Italy eligibility and taxation, and explore viable alternatives – such as transferring your pension to an international SIPP.
What You Will Learn
- Whether transferring a UK pension to a QROPS in Italy is permitted under current HMRC rules.
- What alternative pension transfer options UK residents in Italy should consider.
- Key tax implications, risks, and compliance requirements expats must understand before making a pension transfer decision.
Is It Possible To Transfer a UK Pension to a QROPS in Italy?
To transfer a UK pension abroad, the receiving scheme must qualify as a QROPS – meeting strict criteria set by His Majesty’s Revenue and Customs (HMRC). As of 2025, Italy has no QROPS-registered pension providers, meaning UK expats cannot transfer their pension directly into an Italian-based scheme.
Although Italy previously had 19 approved QROPS on HMRC’s list, all were removed in December 2016 following tighter compliance and regulatory standards. None have been reinstated since.
Transferring Your Pension to an EEA QROPS
Although Italy has no local QROPS, UK expats can transfer their UK pension to a QROPS in another EEA country – such as a Malta QROPS – and withdraw funds in Italy. However, recent policy changes introduced by HMRC in October 2024 have added significant tax considerations.
New Overseas Transfer Charge Rules
Previously, expats living in the EEA could transfer their UK pension to any EEA-based QROPS without triggering the 25% Overseas Transfer Charge (OTC).
As of 30 October 2024, this exemption no longer applies unless you reside in the same country as the QROPS provider at the time of transfer.
For example, if you reside in Italy and transfer a £300,000 pension to a QROPS in Malta, you will incur a £75,000 OTC. This charge can only be avoided if you establish tax residency in Malta before transferring and remain there for at least five years.
Is a QROPS Still the Best Option for UK Expats in Italy?
While QROPS were once a flexible option for UK expats across the EEA, the 2024 changes to the Overseas Transfer Charge (OTC) have made them significantly less attractive – particularly for those retiring to Italy.
To avoid the 25% OTC, the pension holder must live in the same country where the QROPS is based at the time of transfer. For expats already living in Italy, this effectively rules out QROPS in Malta, Gibraltar, or any other jurisdiction unless you are willing to relocate again or absorb a substantial tax charge.
As a result, a QROPS is no longer the most tax-efficient route for most UK expats residing in Italy. Unless you have specific needs such as a very large pension pot, highly bespoke investment preferences, or estate planning structures that require a QROPS, it’s worth exploring alternative solutions.
Other Tax Implications To Be Aware of When Transferring to an EEA QROPS
Beyond the Overseas Transfer Charge (OTC), several additional UK tax rules may affect your QROPS transfer – especially if you access funds early or breach residency criteria.
| Condition | Explanation |
|---|---|
| Early withdrawals | Accessing QROPS benefits before the normal minimum pension age (55, rising to 57 in 2028) is only permitted in exceptional cases such as serious ill health. Otherwise, withdrawals are treated as unauthorised payments and taxed at 40%, with additional charges of up to 15% if more than 25% of the fund is withdrawn. |
| Residency rules | To avoid UK taxation on withdrawals, you must be non-UK tax resident for ten full and consecutive tax years. Further, accessing QROPS funds within five years of the transfer may lead to UK tax exposure under HMRC’s QROPS reporting rules. |
Can You Transfer a UK Pension to a Non-QROPS Scheme in Italy or EEA?
While UK legislation does not prohibit transferring your pension to a non-QROPS scheme, doing so carries substantial financial risks and tax consequences. These include:
| Charge | Explanation |
|---|---|
| 40% Tax Charge | This is the minimum HMRC tax liability for unauthorised transfers to non-QROPS schemes. |
| Unauthorised Payment charge | Transfers to unapproved schemes are typically treated as unauthorised payments, triggering charges of up to 55%. |
| Additional Penalties | Further tax penalties may apply depending on the size of the transfer and your residency status. |
In addition to punitive tax treatment, transferring to a non-QROPS scheme may expose you to the following issues:
- Lack of regulatory protection: Non-QROPS schemes may not comply with UK or EU pension regulations, leaving you unprotected in the event of provider insolvency, fraud, or administrative failures.
- Unregulated investments: These schemes often permit access to high-risk or illiquid assets. If these investments perform poorly or are mismanaged, you may not be entitled to compensation – unlike with a UK-registered or FCA-regulated scheme.
To avoid these financial pitfalls, UK expats should consult a qualified pension transfer specialist. At Titan Wealth International, our experts help you assess cross-border pension options, ensure full HMRC compliance, and implement a retirement strategy that mitigates tax exposure and protects long-term savings.
A More Suitable Route: Transferring Your UK Pension to a SIPP
A Self-Invested Personal Pension (SIPP) – also known as an international SIPP for expats – is a flexible UK-based pension structure available to both residents and non-residents. It offers a robust alternative for UK expats who wish to retain control over their retirement assets while remaining under the protection of UK regulation.
The key benefits of a SIPP are:
- Pension consolidation: Transferring your pension to a SIPP enables you to consolidate multiple pension pots into a single structure, simplifying portfolio management and retirement planning.
- Broad investment access: SIPPs offer exposure to a wide range of investments, including UK and overseas equities, commercial property, structured products, and cash holdings.
- Estate planning advantages: You can nominate any beneficiary to receive your pension upon death. Funds can be passed on as a lump sum, drawdown, or annuity. If you die after age 75, beneficiaries pay tax at their marginal rate.
- Flexible contributions and withdrawals: You control how much you contribute and when. Once you reach age 55 (57 from 2028), you gain access to tax-efficient withdrawal options, including lump sums and income drawdown. For example, you can choose to draw 25% tax-free and leave the remainder invested to grow, drawing income monthly, quarterly, or as needed – depending on your personal cash flow needs. Pension drawdowns from a SIPP are taxable in your country of residence, so you need to plan around Italy’s income tax rates and DTA rules.
- Cost-efficiency: SIPPs typically have lower annual charges than many offshore structures, particularly QROPS, due to transparent fee structures and access to clean share classes.
QROPS vs. SIPP: Which Is More Efficient?
For many UK expats, SIPPs offer similar benefits to QROPS – such as investment freedom and flexible withdrawals – but often at lower cost and with greater regulatory transparency.
Unlike many QROPS providers, SIPPs only permit clean share classes, which exclude adviser commissions. In contrast, some QROPS schemes allow non-standard share classes that include built-in commission charges. As a result, the total cost of holding an investment in a QROPS can be 2–5% higher than in a SIPP over time.
If you’re weighing the pros and cons of a SIPP versus a QROPS, it’s essential to consult a regulated pension transfer specialist. At Titan Wealth International, our advisers help you compare both structures based on your retirement goals, investment profile, and residency status.
Keeping Your Pension in the UK
Retaining your UK pension without transferring it is an option – but it comes with challenges for expats in Italy:
- Banking restrictions: Some UK banks may close accounts for non-residents, making it difficult to access your funds. While some pension providers can pay into international accounts, they may impose currency conversion charges or administrative fees.
- Double taxation risk: Under the UK–Italy double tax treaty, your pension is generally taxed in Italy. However, if UK tax is withheld at source, you may need to reclaim it using the appropriate mechanisms, such as the Foreign Tax Credit system.
- Currency exposure: Keeping your pension in GBP subjects you to exchange rate volatility. If the pound weakens against the euro, the real value of your pension income in Italy could decline, impacting your financial stability.
Book Your Complimentary QROPS Review
If you’re living in Italy and considering a QROPS—or already hold one based in the EEA—recent HMRC rule changes could have a significant impact on your pension strategy.
- Assess your liability for the 25% Overseas Transfer Charge (OTC).
- Review your QROPS fees, investment structure, and tax compliance.
- Determine whether your QROPS remains suitable—or if a International SIPP offers greater flexibility and efficiency.
Key Takeaway
In this guide, we’ve explained why UK expats cannot transfer their pension directly to a QROPS in Italy. Instead, we explored two viable alternatives – transferring to a QROPS in another EEA country, such as Malta, or moving the pension to a UK-regulated SIPP.
We outlined the tax implications, regulatory changes, and financial considerations of each approach, helping expats understand how to maintain compliance while optimising their retirement income.
For some, retaining the pension in the UK may still be an option, though this can involve practical challenges around taxation, access, and currency risk.
Given the complexity of cross-border pension transfers, it is essential to work with a qualified pension transfer adviser. Titan Wealth International offers expert guidance to help UK expats choose a solution tailored to their financial goals while ensuring full regulatory compliance.
