Here’s what the ‘draft Brexit agreement’ shows us about the future for British expats in Europe.

Here’s what the ‘draft Brexit agreement’ shows us about the future for British expats in Europe.

The 585 page document puts forward the current governments proposed agreement with the EU for when the UK officially leaves in March next year.

With the outcome of Brexit still up in the air, the warning ‘nothing is agreed until everything is agreed’ rings very true. Should the UK ‘crash out’ then all agreements so far count for nothing.

For Theresa May, getting backing for the agreed plan does not look easy. Having lost her majority back in June last year and opting to rely on the 10 DUP MPs to make up the difference, the growing pack of rebels in her own party could ensure the proposed agreement doesn’t go through.

Whilst the plan has a lot of interesting elements, we thought we should highlight the most important issues for expats:

Freedom of Movement

The freedom to travel at will between all EU states or between the EU and UK for work or pleasure – has not been agreed to date.

The UK has rejected freedom of movement as part of its aim to limit immigration. The EU has reciprocated resulting in the possibility that UK citizens in employment or running cross border businesses may face issues. UK citizens may also become time limited when visiting other EU states for pleasure.

For Brits currently in European countries, they will be able to continue living and working there. The issues arise for people who want to go and work in another country after the ‘transition period’ as the preservation of rights seems to only apply to people living or working abroad prior to completion of the exit transition period.

The agreement also refers to citizen’s rights being protected in their ‘host state’. If you are permanently based in one country it seems you are accounted for, but if you work across multiple countries and move frequently then you could see this at least becoming trickier to do.

All of the citizen’s rights agreed upon in the plan are fixed for 5 years from the end of the transition period. So after that, things could easily change again.

Existing UK law prevents many expat citizens voting in British elections if they have lived in another country for more than 15 years. Once again, if there is a snap UK election or even a second referendum, thousands of us will not be able to take part.

Double Taxation treaties exist to ensure that citizens do not have their incomes or pensions taxed in the UK and again in the country where they choose to live. There have been cases in Spain for example where Expats living there are finding that local Spanish Tax Officials are already refusing to honour the UK/Spanish Convention on Double Taxation.

There are no answers yet on what may happen if UK crashes out.

Continuing healthcare under the SI system for retired people from the UK has been agreed in the draft Brexit agreement.

At the moment, medical treatment for an SI holder which is normally paid, for example, by France for its citizens, is sent to the NHS for reimbursement. Similar rules apply in other EU States.

Those in work or spending part of their time living in another EU country usually rely on the EHIC scheme. There is no agreement yet on the future of this. It is possible they may need full health insurance cover. If you are currently receiving health care you will remain covered, the questions arise after the transition period finishes.

Within the EU, British Students can get support to study in EU universities (The Erasmus Scheme). Our Government maintains this will continue, but it is not confirmed and may not apply if the UK crashes out.

Pensions and benefits

The existing EU regulation which protects receipt of UK State pensions and benefits could cease to have effect. The UK would have the power to modify the issue of State pensions in Europe and even stop annual increments. Clause 20 of The Pension Act 2014 specifically allows for annual increases to be stopped for pensioners resident abroad.

At the time of writing, no provision has been agreed for financial ‘passporting’ – the mechanism which permits financial institutions to trade between the UK and other EU countries. This places the administrators of private pension funds in a legal dilemma: they are bound to serve their pension holders, but would be banned by law from doing so if they live outside the UK.

Since 2006 when the EU legislation came into place that saw the freedom of movement of labour and capital, over £20 billion has been transferred out of UK pensions by expats living abroad. As yet, whether this will be stopped is still unclear, however it seems likely that HMRC will want to change this given that once these benefits have been transferred out of the UK, they can no longer be subject to income tax on draw-down if the beneficiary is living abroad.

If you are currently living or working abroad and have concerns about the future, get in touch with us here for an overview of the options you have available and to ensure you are best prepared for any eventuality.

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Andrew Hipshon

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