Move To Europe During Brexit?

Do you think that now is a good time to relocate to the continent? I am not sure how things are going to pan out, and whether it would be better to move to France or Spain in the current Brexit climate.

Jason Porter of expat financial advisory firm Blevins Franks answered this question.

“Whether it would a good idea to relocate to the continent will depend upon a number of factors, and an awful lot of those will be personal to you and your family. Tax and financial planning is just one aspect of this. But there certainly are a number of European jurisdictions where if you structure your financial affairs correctly, you can not only have a cheaper standard of living, but also pay less tax than you would in the UK. Some of this though will depend upon what stage you are at in your life – working, or in retirement.

 

“At this preliminary point in the Brexit negotiations, we do not really know what the final position might be. All the EU nations will act as one in the negotiations, and also in the final agreement with the UK. So, there should be no differences between the terms agreed with France and Spain on things like residency, healthcare, social security deductions and the impact on the UK’s inflation-linked state pension.

 

“Taxes relating to the individual and family (income tax, capital gains tax, wealth taxes, estate taxes), have always been dealt with separately from the EU; each nation decides its own domestic tax system at a Parliamentary level, and negotiates with other individual nations on a bilateral basis to agree double tax treaties. On a domestic basis, there is very little difference between France and Spain, and it would therefore depend upon your sources of income, and what stage you are at in your life (if you are working, the majority of your income will be earnings, while if you are retired it will be pensions and living off capital).

 

“France has an annoying second layer of taxes, known as social charges, which range between 7.5%-15.5%, and actually raise more in revenue than French income tax and add to the individual’s overall tax burden. But, for somebody approaching retirement, who is looking at how best to take his pension, if you wanted to go down the 100% lump sum route, this would only be taxed at 7.5% in France, compared to the normal income tax scale rates in Spain (and the UK).

 

“While for the relatively wealthy France has wealth tax, Spain’s own version has a higher maximum rate. As an example in the Balearics it could hit 3.45% per annum.

 

“You should never choose a country to move and/or retire to purely on the basis of its tax system and/or reliefs, as in many cases a country’s tax system is often attractive because in so many other ways it is unattractive. But from a European perspective, the most attractive tax systems, where you don’t have to be super-rich to benefit, belong to Portugal, Malta and Cyprus.

 

“While the period of Article 50 discussions was envisaged to be two years, it is likely this will take significantly longer, and the majority of opinion suggests there will be an extended transitional period during which current arrangements will remain in place.  This could go on for many years (some are suggesting ten years).

 

“You are not being premature, and if you move you may actually be in a better position than if you waited for the final agreement. You would be based in a new country some time ahead of Brexit – being ‘in-country’ is likely to be a better position than for those moving later, in terms of obtaining residency and healthcare benefits.

 

“If tax and financial matter are major drivers to you, then the tax position in each EU state will not change pre- and post-Brexit – taxes relating to the individual and family are decided by each nation independently, as are the tax treaties between nations.”