Deadline looms for Britons living in EU
There are just days left for the UK to ask the EU for an extension to the Brexit transition period beyond 2020. This leaves many Britons living in the EU in a quandary.
Although the UK formally left the EU on 31 January, the transition period means that little has changed for citizens and businesses so far. It was meant to provide 11 months for the two parties to negotiate the new trade deals that will determine their future relationship.
The UK government has repeatedly said it will not extend the transition period beyond 31 December. If they cannot reach an agreement with the EU before the end of the transition period, the UK could leave the bloc without a trade deal.
There are currently no protections for UK nationals arriving after 2020.”
30 June is also the last day that prime minister Boris Johnson can request an extension to the transition period. The EU's chief negotiator, Michael Barnier, has said that the EU "remains open" to a delay of one or two years, but a No. 10 spokesman reiterated that "there is no change to the government's position. The transition period will end on 31 December."
Both sides have said that they want to break the deadlock and reach a mutually beneficial solution, but a no-deal Brexit remains a possibility and we need to be prepared for this.
Many are already doing so, with Rightmove Overseas reporting a surge in interest in properties abroad, particularly in Spain, France and Portugal. Searches in May reached their highest point for the year, up 33% on last May.
Residence
Britons who are not yet officially resident in their chosen EU country need to take all the necessary steps before the end of the year. "UK nationals who are lawfully settled in an EU state before the transition deadline can lock in a lifetime of citizens' rights under the UK/EU Withdrawal Agreement," says Jason Porter, director of specialist expat tax and wealth management firm Blevins Franks. "These benefits are protected for as long as they are resident in that country."
"There are currently no protections for UK nationals arriving after 2020," said Porter.
Tax planning
When taking up residence in a new country Britons will become liable for tax there, so they need to prepare for this too.
"When it comes to the taxes they pay in their country of residence, there is no reason for anything to change post-Brexit," says Porter, "as double tax treaties are independent of the EU. However, if a country already taxes non-EU assets or residents differently to EU ones, then they could be affected in future."
Pensions
If British expats are considering transferring their UK pension into a Qualifying Recognised Overseas Pension Scheme (QROPS), they should start soon or they run the risk of paying a 25% tax, Porter said.
Currently they can transfer to EU/EEA-based QROPS tax-free, but this could change after the Brexit transition ends. "The UK has already brought in a 25% ‘overseas transfer charge' for other transfers," says Porter, "and has the means to easily extend this to EU/EEA transfers once it sheds its EU obligations."
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