The joint statement on 19th March agreed that the transitional period will run from 29th March 2019 to 31st December 2020. This gives an extra 21 months to those looking to move to Europe to establish residency and allows talks to move on to discuss what sort of permanent future relationship the two sides will have. The target is to have this agreed by the autumn so that the UK and EU member states will have time to ratify it before Brexit in March 2019.
So during transition the UK will be subject to EU and single market rules, but will have no part in EU decision making and have no voting rights. This does, however, allow time for individuals and businesses to prepare for the changes to come while the freedom of movement, access to benefits etc remain unchanged.
Michael Barnier, the EU’s chief negotiator, indicated that any Brits arriving in an EU state during the transition period will have the same rights and guarantees as those arriving before the beginning of the transitional period. He has also made it clear that the two sides were in agreement on the rights of citizens post-Brexit.
In an article in the Independent Jane Golding, chair of British in Europe, demonstrated that some are concerned about continuing uncertainty, when she was quoted as saying: “Contrary to what David Davis and Michel Barnier are saying, this document provides no more certainty for the 1.2 million British people living in the EU 27, EEA and Switzerland than they had last week. Not only does the text look as though it has been rushed out under pressure but in his statement, Mr Barnier once again said that nothing is agreed until everything is agreed, meaning there will not be legal certainty for the 4.6 million people most directly affected by Brexit until the agreement is finally signed off.”
Those who want to settle in Europe and benefit from the current rights will need to be ‘lawfully residing’ in their chosen EU country before the end of the transitional period (ie before 31st December 2020). The precise definition of ‘lawfully residing’ is not clear and Blevins Franks advise that those already there who have not yet acquired permanent residency, which is available after a period of five continuous years, should take steps to formalise their residency status as soon as possible.
Blevins Franks also point out that the risk of being caught in an administrative backlog for residency is likely to increase as the deadline draws closer and so it is best to push forward with registering with local authorities and use the transitional period to build up the time spent as a ‘settled resident’ rather than delaying applying for residency until the transitional period arrives.
It appears that if you are a settled resident by the end of the transitional period you will retain the right to be joined by existing partners and close family members even after Brexit. It is not clear, however, whether having established your rights to stay in one EU country you will be able to automatically relocate to other EU countries to work or study.
Holders of the EU ‘Form S!’ will be able to continue receiving reduced cost or free healthcare in the EU and the European Health Insurance Card (EHIC) will continue to provide cover when visiting other EU countries.
Blevins Franks advise that as things stand, Brexit will not affect how British expats withdraw or transfer UK pension funds. However, they point to the 25% tax introduced on transfers to QROPS located outside the EU/EEA and point out that some speculate that this could be extended to within the EU once Britain has left. There may therefore be benefits to transferring pensions before any change.
Taxation of non-EU/EEA assets are another potential model for future taxation of EU assets with the potential for the UK to remove capital gains tax relief from the sale of EU assets.
As Michael Barnier commented the announcement of broad agreement on the transitional arrangements was a ‘decisive step’ but ‘not the end of the road’. There is still a long way to go with the likelihood of continuing volatility in exchange rates and uncertainty for expats until a final agreement has been reached on the arrangements after the transitional period is over.