As Britain undertakes the fifth round of Brexit talks, some headway has already been made in some key areas affecting expatriates.
According to UK Brexit Secretary David Davis, previous negotiations “made real progress on issues which will enable citizens on both sides to continue to live their lives broadly as they do now”.
So what has been agreed and what issues affecting citizens’ rights are still under negotiation?
Onward freedom of movement
In a significant move, Britain has proposed more flexibility for expatriates’ freedom of movement by offering EU citizens in the UK “guaranteed rights of return”. This means those lawfully resident in Britain before Brexit would be able to leave and freely return at a later date. Previous proposals only allowed a two-year window for this right.
The ball is now in the EU27’s court to agree reciprocal rights for the movement of Britons within the bloc. As things stand, a UK national resident in Portugal, for example, would be unable to relocate to Spain from April 2019 without having to apply for visas and permits as a non-EU citizen.
Hopefully, an answer on whether the EU27 will mirror Britain’s offer will follow the conclusion of the current round of negotiations.
Access to healthcare and pensions
Both sides have confirmed they will carry on reimbursing certain healthcare costs for citizens under the EHIC (European Health Insurance Card) and S1 schemes. They have also agreed to continue yearly inflation increases in state pension payments for nationals living abroad.
One area still to be resolved is the potential ‘cliff-edge’ for British personal pension and insurance payments. When current EU ‘passporting’ rights for UK financial services companies expire on Brexit day, these providers cannot legally make payments to Britons abroad. However, with both sides having a mutual financial interest in resolving this issue, it is likely to be addressed early in the next phase of negotiations.
Legal protection for citizens
A former ‘red line’ area for Britain has been how much power the European courts should have over UK law after Brexit. The EU have maintained that EU citizens must continue to be protected by the European Court of Justice (ECJ) while living in the UK post-Brexit. The Prime Minister initially insisted that the UK would “take back control of our laws” post-Brexit and have exclusive enforcement rights within its borders.
However, she has now offered more flexibility by signalling a future role for the ECJ in settling disputes on British soil. Crucially, she has also offered to incorporate legal protections for EU citizens into UK law to ensure Parliament cannot restrict these rights.
The divorce bill
Long an issue of contention between the two parties, the Prime Minister has now confirmed that Britain will pay its financial dues until 2020. She also reassured the EU27 that they will not have to pay more or receive less as a result of the UK’s exit.
However, the actual figure required to meet these promises is unclear. So far, she has only agreed to pay a divorce bill of around €20 billion up to 2020, falling short of the estimated €50-€100 billion payment expected by the EU.
Delaying full Brexit until 2021
In her speech in Florence on September 22, the Prime Minister requested a two-year transition period for Britain’s exit from the union. She pledged that Britain would continue to follow EU rules until 2021 – including freedom of movement and paying into EU coffers – in return for uninterrupted access to the single market.
While this was not discussed in the formal talks that followed, a transition period is expected to be considered in the EU summit later this month. There, the EU27 will discuss whether “sufficient progress” has been made to move negotiations beyond specifically divorce-related issues.
What happens next?
Britain’s proposals have been welcomed as “a step forward” by EU chief Brexit negotiator, Michel Barnier. However, he suggested “it will take weeks, or maybe even months” before they can shift the timetable onto the next phase of negotiation topics, including trade arrangements.
Britain has now made concessions in three key areas – accepting free movement of EU citizens, paying its share of EU bills and maintaining the legal authority of the ECJ – which is widely seen as a positive step towards securing mutual agreement. Although there is still a long way to go, Britons living in Portugal can find reassurances in the latest developments, especially the certainty around healthcare and state pension payments.
Amidst so much future uncertainty, however, it is important to understand how you could be affected and be as prepared as you can possibly be. A locally-based financial adviser who understands the interaction between both the UK and Portugal tax systems can help keep you up-to-date with Brexit developments and find the best solutions tailored for you as an expatriate.
By Adrian Hook
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Adrian Hook is a Partner of Blevins Franks and has been providing holistic financial planning advice to UK nationals in the Algarve since 2007. Adrian is professionally qualified, holding the Diploma for Financial Advisers.