June marked the 10-year anniversary of the Brexit vote. What has changed for UK nationals living in and moving to southern Europe since then? We look at residence rights, the 90-day rule, financial services, taxation and healthcare.
10 years have passed since the UK’s European Union Referendum in June 2016. After a few years of debate and uncertainty, the UK formally left the EU on 31 January 2020. It remained within the Single Market and Customs Union while negotiations continued, with the Transition Period ending on 31 December 2020.
While much of the public debate initially focused on politics and trade, the reality for expatriates has revolved around practical issues: residence rights, travel, import duties, banking and financial advice.
From EU citizens to third-country nationals
Perhaps the most visible change for UK nationals wishing to live in countries like France, Spain, Portugal, Cyprus and Malta has been their legal status. Before Brexit, British citizens enjoyed freedom of movement across the EU. Living, working or retiring in another member state involved relatively little administration. Today, they are generally treated as third-country nationals, subject to local immigration rules unless they secured protected rights under the Withdrawal Agreement.
Expatriates covered by the Withdrawal Agreement generally retained their residence rights, although they have to comply with local registration requirements and keep documentation up to date.
For Britons moving to the EU today, Brexit introduced a different reality. Prospective residents must qualify for residence permits or visas under each country’s immigration rules. Retirees often need to demonstrate sufficient income, healthcare cover and accommodation before obtaining residency.
Nonetheless, achieving your dream retirement in Spain, France, Portugal, Cyprus and Malta remains a viable and achievable option for many, even if it does require more bureaucracy, advance planning and expert advice.
Holiday homeowners limited by the 90-day rule
UK passport holders visiting the Schengen Area are now subject to the 90-day-in-180-day rule unless they have residency rights in an EU country. Merely owning a property does not provide an exception to this rule.
This restriction has had a significant impact on holiday homeowners, who can no longer come and go as they please. Many have to limit their stays and carefully monitor the time spent in the Schengen Area.
Others made the decision to become full-time residents and fully embrace expatriate life. If taxation is holding you back, with specialist advice and careful planning, even countries like Spain and France can offer surprisingly favourable tax environments for retirees.
The financial services shock
Another significant but less understood Brexit consequence for expatriates concerns financial services.
When the UK left the Single Market, UK-based financial advisers, firms and banks lost access to the passporting mechanism that allows EU financial institutions to provide regulated services across the bloc. This means many UK-based financial firms cannot provide a full ongoing advice service to EU-resident clients, unless they have obtained all the local permissions in that jurisdiction.
The implications for British expatriates have been far-reaching. Some UK banks and investment providers have had to restrict products or close accounts, or can no longer accept instructions from EU-resident clients or accept additional investments into existing arrangements.
And many UK-based financial advisers have lost the ability to provide regulated advice to clients living in EU countries, and are no longer authorised to provide them with ongoing advice.
Healthcare and the S1 form
One area where fears largely failed to materialise is healthcare. The UK-EU Withdrawal Agreement and subsequent arrangements preserved many healthcare rights for eligible pensioners and long-term residents. British retirees receiving a UK State Pension can often continue to access state healthcare in their country of residence through the S1 system, while the UK and EU also coordinate certain social security benefits.
That said, healthcare systems vary considerably between countries. Before relocating, establish what state healthcare you will be entitled to. You may choose to supplement this with private medical insurance, or it may be a requirement of your residence application.
In France, UK nationals covered by an S1 benefit from reduced social charges on certain types of investment income and the exemption on a percentage of their pension income.
Watch your tax responsibilities
Brexit did not fundamentally alter double taxation treaties, which remain in force between the UK and individual countries.
However, British expatriates should pay close attention to their tax residency status, how their income and assets are taxed, and their local reporting obligations. Tax authorities across Europe have become increasingly sophisticated in exchanging information, making compliance more important than ever.
And now, the EU’s Entry Exit System (EES) border controls make it easier to identify ‘overstayers’ within the Schengen zone.
Further, some individuals may spend enough time in a country to meet its tax residency criteria without realising it or formally declaring their status. This can result in tax investigations, backdated liabilities, interest charges and penalties, as well as the immigration consequences.
Many expatriates are also discovering that their UK arrangements may no longer be tax-efficient once they become tax resident elsewhere. Investments, pensions and savings structures that worked well before moving abroad may not receive the same treatment in France, Spain, Portugal, Cyprus or Malta.
Why local expertise matters
Brexit has reinforced the importance of receiving advice that is both cross-border and locally compliant. A strategy that works perfectly in the UK may be inefficient, or even detrimental, once you establish residence elsewhere.
In addition to the regulatory considerations highlighted above, working with an adviser who lives and operates in your country of residence offers significant advantages.
For a start, they have first-hand experience of relocating and settling in the country themselves. They have a deep understanding of the local tax and succession regimes, and planning opportunities available, and keep up to date with regulatory changes.
In contrast, continuing to rely solely on UK-based advice can create risks. You could end up selling assets at the wrong time, holding unsuitable investments, paying more tax than necessary, or leaving your beneficiaries to deal with unnecessary administrative, tax or inheritance complications on your death.
Blevins Franks – perfectly positioned to help you
Ten years after the referendum, Brexit may have changed the rules but, with the right planning and advice, UK nationals continue to retire in the EU and enjoy expatriate life with long-term peace of mind.
The key lesson from the last decade is that cross-border living requires more specialised advice and planning than it once did. Whether you are already settled in Europe or considering a move, it is worth reviewing your financial arrangements, residence status and long-term plans.
Given the loss of UK financial services passporting rights, ensure any adviser or firm you use is properly authorised to service residents in your new country.
Blevins Franks has offices in the UK, Spain, France, Portugal, Cyprus and Malta, and is authorised and regulated to provide financial advice in these jurisdictions. Our advisers live locally and have in-depth knowledge and expertise on taxation, residence, double taxation treaties, estate planning, pensions and investment, as well as the practical local aspects of setting up home in a new country.
We’ve been helping people move from the UK to southern Europe, and advising expatriates living there, for 50 years, giving us a wealth of experience. Our team can provide a strategic financial plan for the whole process, from your early planning stages in the UK, ensuring you do everything at the right time, through your retirement years abroad, and should you return to the UK in the future.
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