This is a very historic moment for the UK. Forty-three years after joining the European Community it now starts the process of leaving the EU. This is new territory for us all, and while we hope for a smooth transition there will be a period of uncertainty until the various negotiations are completed and we find out what the changes will be.
Leaving the EU will affect most UK nationals, in varying degrees, whether you live in the UK or abroad. Expatriates living in the EU have extra concerns such as over residency, healthcare, property rights etc.
No-one can be sure exactly what will happen next, but we can put your mind at ease in some key areas.
It is also worth noting that (according to an IPPR 2010 survey) the country with the most number of British expatriates is Australia. The US, Canada, New Zealand and South Africa are all in the top eight. So while it may be easier to move from one EU country to another, it is perfectly possible to live in countries with more distant relationships.
Is there anything I should be doing now?
It is expected to take at least two years, if not longer, to work out the terms for leaving the EU. Nothing changes in the short-term. You will have plenty of time to consider how to respond to whatever changes emerge.
Do I have the right to stay in Portugal?
Speaking on June 24, Portugal Prime Minister António Costa said it was a “sad day for Europe” but that he believed that the very old alliance between the two countries would carry on. He went on to say that Portugal “will do everything to ensure all the rights of the Portuguese community in the UK” are guaranteed, along with “all the rights of the British citizens who live, visit or invest in Portugal”.
Nothing should change with regards residency for the two or more years the procedure to leave the EU will last, and looking ahead, with so many EU nationals living in the UK and vice versa, we would expect new bilateral and multilateral residency agreements to be worked out, and these could maintain the current benefits of EU membership for expatriates.
With expatriates contributing as much as they do to the local economy, it is likely that the authorities here will want to make sure Portugal remains an attractive place for Britons to invest and relocate. Portugal, after all, set up the non-habitual resident regime, with its tax advantages, to encourage wealthy foreigners to move here.
What about healthcare?
As with residency, your current healthcare benefits should continue for the next couple of years until the Brexit terms have been ironed out. Again, it is possible that new bilateral agreements will be negotiated with regards healthcare for expatriates, but we will need to wait and see what happens here. It may become more important to have good private health insurance.
What about taxation? Will I pay more tax in Portugal?
If you are resident in Portugal, Brexit will not affect how you are taxed here except in very few circumstances. The local rules will remain the same as for all residents, and double tax treaties, such as the one between the UK and Portugal, are independent of the EU, so your existing tax treatment will continue to apply.
Certain reliefs such as the main home reinvestment relief on the sale of your Portuguese home may be affected since currently reinvestment is only allowed into either a property in Portugal or another EU country.
What about my investment portfolio?
If you use tax-efficient investment structures which are provided by companies outside the UK, such as the ones Blevins Franks recommends to clients, these are not dependent on UK rules and so Brexit does not affect them.
Investment markets do not like uncertainty so there is bound to be some volatility for a while. Try to avoid turning paper losses into real ones by selling investments which have fallen. It is also important to have a portfolio that is well diversified and designed around an objective assessment of your attitude to risk.
While the longer-term implications are difficult to predict, it will take several years for the terms and details to be worked out. With professional and personalised financial advice, you can make sure that you are prepared and in a good position to protect yourself, whatever the future brings.
By Gavin Scott
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Gavin Scott, Senior Partner of Blevins Franks, has been advising expatriates on all aspects of their financial planning for more than 20 years. He has represented Blevins Franks in the Algarve since 2000. Gavin holds the Diploma for Financial Advisers. | www.blevinsfranks.com
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