A big issue to hit the news recently is whether UK banks can continue providing services to EU residents after Brexit. It has been widely reported that high street banks are writing to clients in some EU countries to advise that their accounts will be closed by the end of the year.
How Brexit affects
Financial institutions need to be authorised and regulated to provide services to clients in their country of residence. So far this has been relatively easy, since, as part of the EU, UK-regulated banks and financial advisory companies can ‘passport’ their services into the bloc.
However, the UK will lose these passporting rights from January 1, 2021, unless an agreement is reached to allow the current rules to continue. So far it does not look encouraging. If the UK and EU fail to agree arrangements, UK banks will need to apply for a banking licence in Portugal and any EU/EEA country where they have clients.
This would be very expensive and time consuming; as their overseas client base will be relatively small, many will opt not to. The British banking industry body, UK Finance, confirmed that each bank is deciding whether to apply for the appropriate regulation or close accounts instead.
Therefore, much currently remains uncertain. While some institutions may take steps to be able to provide services to Portuguese-resident clients, others will not. You need to speak to your bank to establish what their plans are.
Other financial services
It is not only banks which are affected – other regulated financial advice and services are too. So if you continue to use a UK-based financial adviser, you need to ask them if and how they can support you post-Brexit if the UK and EU do not agree cross-border financial arrangements.
Likewise, if you have UK investments, will you be able to retain them? If so, will there be restrictions? For example, you may be able to keep a UK policy and withdraw money but be prevented from adding or moving funds and applying for new services. Also check if you can continue to have a ‘long-distance relationship’ with your adviser in the UK, or will you have to fly back to receive advice and sign paperwork there?
The benefits of local advice
While this development may be unwelcome news if you have a long-standing relationship with a UK adviser, this is a good opportunity to review your investments and financial planning. As well as being more practical, an adviser based here in the Algarve could provide you with other significant benefits.
Advisers living in Portugal have first-hand experience of the complexities of the local tax and succession regime. They can keep up to date with relevant legislative changes and react quickly where necessary, being best-placed to advise on the compliant tax and estate planning opportunities available within the local regime. Remember: the way you hold assets can make a considerable difference to the tax bill for you and your heirs.
You also need to ensure your investment portfolio is suitable for your current personal situation. Is it designed to meet your objectives and risk profile today? Is it over-weighted towards the UK or does it have enough global diversification? Are you holding some assets in Euros to avoid exchange rate risk?
Secure financial peace of mind
At Blevins Franks, we are prepared and ready for Brexit. Our local team lives and works in the Algarve and has in-depth, personal knowledge of the Portuguese tax and succession regimes. Being authorised and regulated to continue providing advice after Brexit, we can provide uninterrupted support, regardless of whether the UK and EU reach a deal or not.
With very limited time left before full Brexit begins, now is the time to ask us how we can help you with your investments, pensions and cross-border tax and estate planning to secure financial peace of mind in Portugal for 2021 and beyond.
All advice received from any Blevins Franks firm is personalised and provided in writing. This article should not be construed as providing any personalised taxation and/or investment advice. All information is based on Blevins Franks’ understanding of legislation and taxation practice, in the UK and overseas at the time of writing; this may change in the future.
By Dan Henderson
Dan Henderson is a Partner of Blevins Franks in Portugal. A highly experienced financial adviser, he holds the Diploma in Financial Planning and advanced qualifications in pensions and investment planning from the Chartered Insurance Institute (CII). | www.blevinsfranks.com