Has any light been shed on Brexit?

Now that British Prime Minister Theresa May has outlined her negotiating plans for Brexit, what do we know about how it might affect expatriates in Portugal?

While there is still much uncertainty, we are optimistic that Britons will continue to enjoy the benefits of owning property and living in this beautiful corner of Europe.

The UK is likely to leave the single market

On January 17, May revealed that her Brexit vision means that Britain “cannot possibly” remain in the European single market. She perceives the free movement of goods, services and people as incompatible with the Brexit objectives of gaining control over British borders and decision-making.

Instead, she wants to achieve the “freest possible trade” with EU countries in a “new and equal partnership”. Ruling out any arrangement “that leaves us half-in, half-out”, it is unlikely Britain will accept the Norwegian approach of remaining in the wider European Economic Area.

This means that the current benefits of EU membership for expatriates will most likely be negotiated one-by-one over the two-year negotiation period.

Expatriate rights “remain a priority”

It is reassuring that May reiterated her intention to “guarantee the rights of EU citizens already living in the UK and of UK nationals in other states as early as we can”.

However, some were disappointed she did not get the ball rolling by committing to continue healthcare and pension arrangements for Britons living in Europe and the right for EU citizens already in the UK to remain. Many believe this gesture is within her scope and could have paved the way for reciprocal deals for British citizens living in Europe.

With tighter control of British borders at the forefront of May’s agenda, it is unclear how her proposed system to “attract the brightest and the best” to Britain could work, or what repercussions this may have on Britons abroad.

She suggested that many EU countries want to agree a deal now to offer certainty to expatriates, but “one or two others do not”. However, EU spokespeople insisted there was “complete unanimity” among the 27 EU states that no such negotiations can take place until article 50 is triggered.

The Brexit deal will be put to Parliament

May has committed to give MPs a final vote on Brexit and agreed to consult Parliament before sealing the deal.

Does this mean the decision can be reversed if it faces enough formal opposition? It is highly unlikely, with Brexit Secretary David Davis declaring the UK will leave the EU whatever happens. Encouraging MPs to “respect the democratic decision that was taken”, May pledged to trigger Article 50 before the end of March and work within the two-year framework outlined in EU laws.

What does this mean for expatriates?

While we can now expect a clean break with the EU rather than a softer approach, there are still many unknowns. This continued uncertainty can be unsettling for those living in or planning to move to Portugal, but the fact is that little has changed since Brexit was announced. There are still at least two years before changes to your EU membership can be implemented.

Portugal and the UK have a strong relationship. With tens of thousands of Portuguese citizens in the UK and thousands of Britons living in and contributing to the economy in Portugal, it is in the interests of both countries to agree reciprocal residency rights. However, until we know if agreements will maintain benefits like healthcare, it could be a good idea to explore private health insurance options.

Remember, whether Britain is in the EU or not is generally irrelevant to your taxation and will not affect the tax benefits of Portugal’s non-habitual residents (NHR) regime. Of course, to be eligible for NHR you need to meet Portuguese residency rules and these are likely to change for Britons after Brexit. However, as the NHR regime was set up to attract wealthy foreign nationals – including those outside the EU – it is likely that Portugal will continue to welcome suitable British applicants.

There are things you can do now to make things easier. Many UK residents who are thinking of moving to Portugal, or already living here, are taking steps to secure their Portuguese residency before Brexit is implemented. Some British expatriates are bolstering their position by applying for Portuguese citizenship. Now is also a good time to review whether you can benefit from transferring your UK pensions and taking advantage of current opportunities before Brexit takes effect.

You should also be prepared for Brexit developments like May’s keynote speech to continue to cause uncertainty for the British pound and investment markets. For expatriates, there has never been a better time to review your financial planning and explore your options to make sure you take appropriate action as Brexit unfolds.

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.