The Financial Implications of Moving From the UK to Europe

Chase Buchanan explores the financial implications of moving from the UK to Europe and discusses why your visa category could affect your tax position

Relocating to a European country as a British national has certainly changed post-Brexit, with considerations such as visa availability, the potential for exposure to double taxation, and various rules that apply differently to UK citizens.

Chase Buchanan Wealth Management, a global advisory firm specialising in financial guidance for expatriates, explains some of the changes, what they mean to your financial planning, and why your visa category could affect your tax position.

Can British Nationals Still Move to Europe?

The first area to cover is that you can absolutely proceed with a planned move to the EU. While freedoms of movement no longer apply, and you will need to have an appropriate visa, residence permit or work permit, UK residents are not prohibited from relocating.

However, the implication is that whether you wish to retire in Cyprus, settle with your family in Portugal or launch a business in France, you must understand the immigration rules and how to demonstrate eligibility.

Choosing an EU Visa Category

Much depends on the reason for your move, but normally you will need to:

• Stay within the 90-day maximum visit limit within each 180-day period, applied across the EU, unless you have documentation permitting a longer stay – you can use this visiting threshold to decide where you would like to live or explore alternative locations.
• Apply for a long-stay visa, detailing your intentions. Some EU countries have attractive visas aimed at affluent retirees, and others offer fast-track visas for professionals who fulfill a skills shortage requirement, so you should select your visa category carefully.
• Submit a residency or permanent residency application after meeting minimum physical stay requirements, where applicable.
• Apply for citizenship, if relevant, following a further period of permanent residency – normally from five years and upward.

Residency or citizenship by investment visas, also known as golden visas, are an alternative. These programmes allow foreign nationals to become permanent residents in return for investing in the local economy, purchasing a property or making other contributions above a minimum value.

Currently, only Malta offers citizenship by investment, with minimum contributions of €700,000 and citizenship available to qualifying applicants after 36 months of residency. There are residency by investment schemes in Spain, Portugal and Cyprus, although investment values, the terms of residency and eligibility criteria vary.

How Has Brexit Changed the Tax Implications of Moving to the EU?

Tax residency and residency status are commonly confused but are assessed on different bases. The norm is to refer to the Statutory Residence Test, facilitated by HMRC, which evaluates your position as a UK or overseas tax resident based on factors such as:

• Whether you live in one country or the other for over six months of the year.
• The location of your primary home and properties held in either jurisdiction.
• Where your main income or revenue originates.
• Your connections to each country – such as familial ties, investments and business ownership.

It is possible to be both an overseas resident with a permanent residency visa and to be considered a UK tax resident if you fulfill any of the categories within the Statutory Residence Test. If that happens, the financial impact is that you may potentially be exposed to dual taxation. Dual or double taxation occurs when the same event or income is exposed to tax in two jurisdictions.

Common Circumstances That Give Rise to Double Taxation

While double taxation is unusual, this may occur in scenarios such as:

• Living in one country but having assets, property or employment in another.
• Being assigned a position in an EU country by an overseas employer.
• Retiring in Europe but claiming pension benefits from the UK.

Most EU countries have dual tax treaties with the UK. Those bilateral agreements ensure that a tax resident of one country will not be taxed twice. However, you must declare your income correctly and apply dual tax treaties according to the regulations.

In most cases, that means paying one tax obligation and claiming a credit to offset your further tax charges, but that may depend on the nature of the tax, the origin of the taxable event, and the variances between tax regimes.

Expatriates will almost always be expected to submit documents, proof of taxation paid and declarations reporting their income to avoid any potential tax audits or additional interest charges where a tax office believes an individual has unpaid tax liabilities.

Changes to Exchange Rates in the Post-Brexit Environment

The departure of the UK from the EU has meant that some transactions and transfers between British and European banks are not now as smooth or straightforward. For example, some pension schemes or investment structures may permit payments only to be made to a UK bank – they may not allow cross-border payments to be made in either GBP or the local currency.

Currency markets initially responded to Brexit by devaluing the British Pound by a significant margin. However, exchange rates were also affected by the drop in the Euro following the crisis in 2010 and quantitative easing measures introduced by the EU's central bank in 2014.

Although GBP has yet to recover to pre-Brexit strength, it has regained some value, but it is important for any expat receiving an international income or transferring funds from the UK to another country to be conscious of exchange rate risks.

Will Rules for UK Nationals Relocating to the EU Change?

While moving to the EU has become a little more complex since Brexit, we would suggest any prospective expat remain mindful that regulations and legislation have been in a state of flux since, and some EU countries are expected to introduce new visa categories and rules for British nationals in the coming months and years.

There is also a strong likelihood that there will be more significant changes if the party in government changes in the next general election. The Labour Party has announced that, should it be elected, it will revisit the Withdrawal Agreement and look to negotiate more favourable terms.

In the meantime, we recommend seeking assistance from an experienced EU financial adviser or wealth manager at any stage, whether deciding how to manage your pension from a European destination or quantifying what your planned move may cost – in immediate outgoings and long-term tax obligations.

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About Chase Buchanan Private Wealth Management

Chase Buchanan is a highly regulated wealth management company that specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, France, Malta, Portugal, Spain, UK and the USA.

Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15.

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