Change is a constant. When living as an international professional, you have the added complexity of keeping up to date with the changes in the country in which you are living as well as your home country.
There are some recent important changes for expats in Europe, depending on where you live, that you need to be aware of.
1. Expats in Europe with a UK bank account
Although Brexit has officially already happened, we are in a one-year transition period where many of the rules in the new post-Brexit environment are still being worked out.
A recent consequence of this is that some EU residents with British bank accounts – including British citizens living in Europe – are being told they have to close their UK bank accounts.
This is causing stress for a number of people. We have heard from British citizens that are long-term residents in Europe being asked to close down accounts they have held for decades, and of mortgages being called in.
It is only a few banks so far, however our advice is, be prepared, do your research now and plan your contingency actions.
The banks that are acting now are doing so on the expectation that the British government will not reach an agreement with the EU for banking services. If there is no agreement- the no deal Brexit- UK banks are saying they may have to withdraw services to EU residents, including British citizens.
You can speak with us to discuss your options and how to respond to this scenario.
2. Expats in Spain
Many British expats in Spain have resided in the country as non-residents for tax purposes. This means they spend fewer than 183 days per year in the country, plus meeting the other requisites. In doing so, they are taxed more favourably in Spain.
An indirect consequence of the coronavirus pandemic, the subsequent lockdowns, border closures and removal of international travel that so many took for granted, is that some people have been forced to stay in countries, notably Spain, for more than the 183 day threshold.
There is an OECD guidance for countries on how to manage these exceptions in the wake of COVID-19. The Spanish government and tax authorities have gone against this guidance with a new ruling in June 2020 that may cause a great deal of stress to some expats in Spain.
They have published a binding tax ruling that basically states that COVID-19 is not an excuse for being forced to stay in the country beyond the critical 183 day threshold. Normally, any time of being required to stay in a country does not count towards rulings such as this. This would mean that tax non-residents could be classified as tax residents, which, for many people could mean a large tax bill.
This aggressive position taken by Spain is causing much debate and it may yet be challenged; our advice right now, if this might affect you, is to take professional tax advice in Spain and prepare for the worst.
3. Expats in France
The French government’s 2020 budget has introduced some changes that could impact expats living in the l’hexagone.
Particularly impactful for wealthier expats with larger properties or property portfolios, it is important to get proper succession planning advice in France in relation to French law. This is especially important if you think you might retire back to the UK and keep your property in France. In this case, your French property will be assessed for succession planning under French and not English law. The rules for succession in France are quite different and much more rigid. Failure to follow the prescribed asset distribution can result in substantial tax penalties for your beneficiaries. On the plus side, in the 2020 budget they did announce a temporary concession to allow a tax free gift from within families of up to €100,000. There are some caveats: the funds need to be applied to a new small business or used for approved green home improvements for example, and it only exists until mid-next year.
It is complex so if this may impact you, get the appropriate advice.
Being an expat is complex and the environment is constantly changing, requiring us to adapt. We are on hand to help you manage this changes and ensure your financial life remains in order and that you are on track to realise your financial and investment goals. To speak with us about your circumstances, or to get a second opinion, contact us at [email protected].