Irish residents are being encouraged to move their pensions into a Malta IORP through a “consultant company” arrangement. We advise against this.
In the UK, the Overseas Transfer Charge (OTC) is a 25% tax charge on transfers to most offshore pensions (QROPS), unless the pension holder is resident in the same country as the QROPS.
One of the exemptions is if the QROPS is an occupational pension scheme (IORP) linked to a sponsoring employer. This has given rise to a new wave of marketing: advisers encouraging Irish residents to move their pensions into a Malta IORP through a “consultant company” arrangement.
How the Scheme Is Being Sold
The setup is the same as what we see with UK pensions:
- The member creates a new limited company (often offshore or Malta-based).
- That company becomes the “sponsoring employer” of a Malta IORP.
- The individual “employs” themselves as a consultant, paying in a token contribution.
- The transfer is then framed as an occupational pension, supposedly avoiding the OTC and gaining EU “portability.”
Why This Is Problematic for Irish Pensions
- Irish Revenue rules
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- Irish Revenue requires a genuine employment relationship for occupational schemes.
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- A shell consultancy with no real business activity is unlikely to qualify. If challenged, Revenue could treat the transfer as invalid and apply tax penalties.
- IORP II Directive
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- The EU’s IORP II framework (transposed into Irish law in 2021) expects substance in the sponsoring employer.
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- Using a dummy company undermines the spirit of the Directive and risks the scheme’s approval.
- Double tax treaty risks
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- Even if the IORP accepted the transfer, benefits paid to an Irish resident will be taxed under Irish law. There is no long-term tax arbitrage benefit — Revenue will still want its share.
- Regulatory scrutiny
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- The Central Bank of Ireland has already issued warnings about offshore pension transfers. Any arrangement that looks like avoidance is likely to attract direct challenge.
The Bottom Line for Irish Pension Holders
If you’re being advised to set up a company just to sponsor yourself into a Malta IORP, proceed with extreme caution.
- Without a genuine employer/employee link, the scheme risks being treated as non-compliant.
- Irish Revenue has a track record of challenging artificial structures.
- You could face unexpected tax bills, penalties, and even questions over the validity of your pension transfer.
Final thoughts
A true occupational pension has substance: a real company, real work, and real contributions. A €500 consultancy does not meet that test. If you’re told otherwise, ask your adviser for a written indemnity against Irish Revenue tax charges. If they won’t provide one, that should tell you everything.
