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Living in Spain after BREXIT

By Chris Burke
This article is published on: 26th July 2022

26.07.22

In this months regular article I’ll be discussing three main concerns I’ve heard from clients recently:

  • Changes to UK driving licenses in Spain
  • Living in Spain after Brexit, managing your personal finances
  • 18 months on from Brexit in Spain – What has changed / what do you need to do to move here?

Changes to UK Driving Licenses (When Living in Spain)
Up until the end of 2020, British driving licenses were valid in Spain. Furthermore, Brits were able to exchange their British Driving License for a Spanish one up until 31/12/20. From this date onwards, Brits residing in Spain prior to this have not been able to exchange their British driving licenses for a Spanish one.

For those residents who failed to meet the Spanish deadline to exchange their licences for a Spanish one, they currently (as of 08/07/22) cannot drive on their UK licence – this does not apply to holidaymakers hiring a car. The Spanish Government has already issued four extensions to the ‘grace period’, allowing Brits to still drive using their UK license. The grace period ended on 30/04/22.

Hugh Elliot, the British Ambassador to Spain and Andorra, issued an update on Twitter stating that they were working on a resolution to this. The belief is that they are hoping to secure a deal, similar to the UK’s deal with France, Sweden and many other European countries, in which UK Driving Licenses can be swapped for the license of that country (providing that the individual is resident).

According to SpanishNewsToday, the proposed deal would allow Brits living in Spain to swap their UK driving licenses for a Spanish one for an additional period of six months. The deal would also see UK Driving Licenses valid for a further six months. If this proves to be the case and you have not yet exchanged your license, I would recommend that you seize this opportunity.

Spain and Italy are the only EU countries in which Driving License exchange conversations are ongoing.

spanish tax

Financial Matters for Brits living in Spain after Brexit
From a tax perspective, for Brits living in Spain before Brexit there should not be a change as it is highly likely that you were a tax resident prior. Being a tax resident in Spain means that ‘your centre of economic or vital interests is in Spain’. As a result, if this is the case you must declare your wealth and worldwide income accordingly.

However, what has changed is the Private Pension agreement in relation to the Wealth Tax. In 2019, a ruling by Spain’s Directorate-General for Tax declared that Private Pensions from non-EU states are now eligible for Wealth Tax. Please read this article on Wealth Tax to find out more about it.

Furthermore, it is now more important than ever that Brits ensure that their finances are managed correctly. From 2021 onwards, Financial Advisers based in the UK are no longer permitted to advise clients based within the EU. The same situation applies to UK based banks, investment and insurance companies and stockbrokers.

If you are still using a UK-based financial adviser or service whilst a resident of Spain, they may well be breaking the law whilst servicing you. This could still be the case even if you only engage with them when returning to the UK to visit, providing that you are a resident of Spain. Furthermore, their professional indemnity insurance may not cover you. This may leave you vulnerable if you were to receive poor advice.

Book a telephone call or zoom chat with Chris now
Living in Spain after Brexit

18 months on from Brexit in Spain – What has changed?
We are now over a year on from the end of the Brexit Transition Period (31/12/2020). Whilst British Expats in Spain continue to enjoy their life as it was before the Brexit, overall things are a little more complex than they once were. It’s important to understand these changes – some are more complex than others.

For Brits wanting to move to Spain in 2022, although it is far from impossible, the changes imposed have made this more complex. The door has not closed, however, it is important to seek clarification from experts who are aware of the legislation and will be best suited to providing you with available options.

Many Brits in Spain have experienced frequent ‘run of the mill’ changes to their lives in Spain compared to before Brexit. Whether this be extended queues when going through passport control, taxes on imports or companies no longer shipping to EU customers, most British people in Spain will have been effected at least in a minor way. However, there are bigger issues which people need to be aware of.

Living in Spain after Brexit
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90 Day Travel Rule
To summarise, unless you are a Spanish resident or have a visa you can no longer spend more than 90 days in Spain in a rolling 180-day period. This rule has particularly affected Brits who have holiday homes in Spain and used to come and go as they please. Now, it is important to plan your trips to Spain throughout the year to ensure that this 90 in 180-day rule is not broken. Furthermore, this rule does not only apply to Spain. It applies to everyone country in the Schengen Zone.

Brits who are non-residents must also now get their passports stamped as they enter and exit Spain. However, this is a temporary procedure. The EU are working on the European Travel Information and Authorization System (ETIAS), which is set to come in to force towards the end of 2022. This system will allow for the electronic tracking or arrivals and departures.

Spanish Residency Permits – Green Card and TIE
Those who were resident in Spain before the Brexit will keep their Spanish citizens’ rights. They should have the old green NIE card or a new TIE. The TIE, also known as the ‘Tarjeta de Identidad de Extranjero’ in Spanish, should state on it ‘Articulo 50’, meaning that it was issued as part of the Brexit Withdrawal agreement.

Although according to Spanish Law the green card remains valid, Brits have been encouraged to change it. Certain authorities have been said to no longer accept this card as suitable verification. Furthermore, the TIE is far more durable, can simplify administrative processes and acts as a valid form of ID as it contains a photo. In Spain, the law is that you must carry a form of ID when outside of your home. The TIE is allowable whereas the NIE ‘green card’ is not.

Spanish Residency Permits – Post-Brexit Arrivals
There are several ways in which you could apply for a residency permit post Brexit. However, although far from impossible, it must be said that this process is significantly more complicated than if you had arrived pre-Brexit. Working visas have proved challenging to obtain and, depending on your individual circumstance, sponsorship may be required.

If you are retired, you may be able to apply for a Non-Lucrative Visa and Residency Permit. To qualify, you must prove that you are financially stable (with sufficient resources to support yourself moving forward) and have suitable medical insurance along with a clean police record. It is also imperative that you go through the application process in the UK, before arriving in Spain.

Another option is the Golden Visa. You must invest a minimum of €500,000 into a qualifying investment scheme or property. If you were the obtain the Golden Visa, you would not need to abide by the 90 in 180-day rule and you could enter and exit Spain as you please. Please note that this does not give you freedom of movement around Europe, but only in Spain.

If you would like to speak with a Financial Adviser in Spain, Chris Burke is experienced, qualified and legally able to discuss your financial matters. Chris is also able to review your current pensions, investments and other assets, with the potential to make them more effective and tax efficient moving forward.

If you would like to find out more or to talk through your situation and receive expert, factual advice about living in Spain after Brexit, don’t hesitate to get in touch with Chris via the form below – or click the button below to make a direct virtual appointment here.

Book a telephone call or zoom chat with Chris now

Taxes in Spain after BREXIT

By John Hayward
This article is published on: 12th April 2021

12.04.21

The Times They Are a-Changin’ (Bob Dylan:1964)

With the first three months of the year having seemingly whizzed by, I feel that there is a more positive feeling (generally) compared to a few months ago. More and more people are (slowly) receiving a vaccination of one brand or another. At the same time, we feel disappointed and worried that this could be a short reprieve if people lose their patience. We have witnessed crowds acting as if there is nothing out there to worry about. We may well see wave after wave of Covid-19 as the months and years go by. The main thing is to control it and, hopefully, an annual vaccination will be the least of our concerns.

Away from Covid-19, over the coming days and weeks I will be sharing my experiences relating to the concerns of others and their taxes in Spain, France, the UK, and even the USA. This information will cover income tax, capital gains tax, wealth tax, and inheritance tax in Spain and their link with taxes in other countries. I will also explain how I have helped people solve the bank charges problem, how I was able to find pension funds that the person didn´t know they had, and how I have happy clients whose investments have produced increases at a time when a lot of people have believed that the investment world is in dire straits (Perhaps relying a little too much on certain news channels and newspapers).

Since Brexit, there have been quite a few changes in Spain and I am certain that there are more to come. This has been a pretty steep learning/development curve and, as so often happens in Spain, opinion is rife. Knowledge, however, seems to be in short supply. It is quite frightening how many different answers you can get for the same question. Over the last few months, I have been studying the Spanish Tax Office’s information, steering clear of blog sites. At the same time, I have had meetings with my economista on various tax matters. Familiarity of investments outside Spain is lacking by many lawyers and accountants in Spain. It is for people like me and my colleagues to educate and liaise with clients and also with the professionals themselves.

With most countries having a focus on higher taxes or lower allowances in order to pay for the welcome support provided over the last year or so, and the likely consequence of higher inflation, it has become even more important to have savings and investments in the most tax efficient structures.

SIGN UP TO MY EZINE TO RECEIVE INFORMATION ON LIVING IN SPAIN AS AN EXPAT AFTER BREXIT

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Top 3 Financial questions after BREXIT

By Andrea Glover
This article is published on: 1st February 2021

01.02.21

We asked Andrea Glover & Tony Delvalle – What are the current top three ‘hot topics’ with clients, particularly affecting retirees?

UK State Pensions
Andrea commented, “The withdrawal of the UK from the EU has obviously been an area of concern regarding UK State pensions. Now the Withdrawal Agreement has come into force, it is reassuring that those covered by the agreement will continue to benefit from aggregation of periods worked in the UK and EU, and those not yet retired will have the same benefits as current claimants.”

Tony went on to say, “UK State Pensions will be uprated every year whilst residing in France. This will happen even if you start claiming your pension after 1 January 2021, as long as you meet qualifying conditions.”

UK Properties
Many people coming to live in France often decide not to sell their UK home, instead renting the property out to supplement their pension income. Tony explained, “We are frequently asked if this is sensible as a form of investment. Whilst there is often an emotional tie to a former home, or perhaps a client wants to keep the option of returning to their UK home, there can be punitive tax consequences to such a decision, should they then decide to sell the property as a French tax resident.”

Tony continued, “The sale of a UK property has to be declared in both the UK and France. Although under the UK/France double tax treaty you receive a credit in France for any UK tax paid, French residents can also pay social charges on gains arising on the disposal of a UK property. There are also new rules effective from April 2020 in the UK, making such a decision even less attractive.”

Andrea summarised by saying “It really is important to speak to a Financial Adviser, particularly if you haven’t yet made the final move to France. Dependent on personal circumstances, it may be more beneficial to sell their property and invest in a more tax efficient investment vehicle such as an Assurance Vie.”

QROPS for expats

Qualifying Recognised Overseas Pension Schemes (QROPS)
Tony told us that many of their clients have taken advantage of a
QROPS, which enables consolidation of UK pension policies and which has attractive tax and inheritance tax advantages for French tax residents. QROPS can also offer multi-currency flexibility.

Andrea commented, “Many clients currently considering moving their pensions are querying if there are to be any changes in QROPS legislation, in view of Brexit. Our stance on this is that we believe it is highly likely that the UK Government will, after the transition period, impose a 25% tax charge on future transfers to a QROPS, making them less desirable. So, although they may not be suitable for everyone, don’t risk leaving it too late or you may face the 25% charge.”

Living in Spain after BREXIT

By Chris Burke
This article is published on: 27th August 2020

27.08.20

After the results from the UK’s General Election, it seems we are closer to Brexit than ever before, so are you prepared for it living in Spain?

Documentation to remain in Spain

There are many rumours among non-Spanish people of what you need to do to stay in Spain should Brexit happen. The response from the Council recently has been, should you hold a NIE and an Empadronamiento, you are proving you are resident in Spain, so for now these should suffice. However, if Brexit does go ahead, Spain could draw a ‘Stay in Spain’ line in the sand which would then need adhering to. In the worst case scenario, a renewable 90-day tourist visa would give you time to adhere to whatever the new rules are. Spain has said publicly it will reciprocate what the UK does, and the UK knows there are far more British people living in Spain than the other way around in the UK.

UK Private and Corporate Pensions

The current HMRC rules state that if you take advantage of moving your UK pension abroad it must be to either where you are resident OR in the EU (due to the UK being in the EU). If this is not the case, you would have to pay 25% tax on the pension amount. Therefore, it is very likely that as the UK would be leaving the EU, these rules would not be met and the 25% tax charge would start to apply to pension movements outside of the UK. This could be the last chance to evaluate whether it’s better for you to move your pension or not and take advantage of the potential benefits, including being outside of UK law and taxes.

National Insurance Contributions

If you were to start receiving your State pension now, you would approach the Spanish authorities and they would contact the UK for their part of the contribution, taking both into account. Before the UK joined the EU, you would contact each country individually and receive what they were due to pay you. If this becomes the case again, for many British people the UK part of their State pension would potentially be more important, as it is likely to be the bulk of what you receive. We don’t know how Spain will act with regard to state pension benefits to foreigners; therefore it would make sense to manage the UK element well if this is your largest subscription.

I recommend two things here; firstly check what you have in the UK so you know where you are. You can do that here:

https://www.gov.uk/check-national-insurance-record

You can contact the HMRC about contributing overseas voluntary contributions at a greatly discounted rate, from £11 a month: you can even buy ‘years’ to catch up:

https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions

I have mentioned this in Newsletters before, but it really is a great thing to do, both mathematically and for peace of mind. Many people I meet living away from the UK have ‘broken’ years of contributions which is leaving themselves open to problems in retirement.

TIP: If you have an NI number, you do not necessarily have to be British to do this.

Investments/stocks/shares/savings

Time apportionment relief

Statistically, in 75% of British expat couples living abroad, at least one of them will return to live in the UK. It remains to be seen whether this changes if the UK leaves the EU, however, you can easily save yourself some serious tax if you have this in your plan of eventualities.

You can, in effect, give yourself 5% tax relief for every year you spend outside the UK by positioning your investments/savings correctly. Then, upon your return, you can take this tax relief when you are ready, such as in the following example:

Mr and Mrs Brown invested £200,000 ten years ago when they were living in Spain.
After this time, it is now worth £300,000
They returned to the UK and have been resident there for the last year (365 days)

They decide, after being back in the UK for 1 year (365 days) to cash in the investment, taking advantage of ‘Time Apportionment Relief’ which will be calculated the following way:

£100,000 (total gain)
multiplied by the number of days in the UK (365)
divided by total number of days the investments have been running i.e. 10 years (3650 days)

Resulting in a £10,000 chargeable gain (that is what you declare, not the tax you pay).

There are other potential tax savings as well, but they depend on other circumstances. If you have your savings/investments set up the right way you can take advantage of this.

If you have any questions or would like to book a financial review, don’t hesitate to get in touch.

Getting residency in Italy before Brexit

By Gareth Horsfall
This article is published on: 16th June 2020

In this E-zine I am going to provide anyone who is still wondering about residency in Italy, before Brexit, with a quick, hassle-free guide how to obtain it.

I was hoping that I could try and avoid the ‘B’ word again in my lifetime, but alas we are not quite there yet and a number of people have contacted me in the last two weeks to ask about the process of getting residency in Italy before Brexit day arrives (currently 31st Dec 2020, although I have my suspicions it might be extended again – watch this space!).

You may know that the process of getting residency in Italy once the UK leaves the EU will get considerably more complicated. If you are unconvinced then ask an American resident in Italy, they should be able to tell you! Therefore, if you are a British citizen and thinking of making the move to Italy, and are in a position to do it now, then you may want to consider applying before Brexit day to simplify your life. Equally, I know there are many people who are living in Italy but are procrastinating about taking residency. This will act as a useful guide for anyone still sitting on the fence and feel free to share it where you see fit.

Before I give an explanation of the things to watch out for, here is a summary of the much more complicated process of elective residency, if you choose to do so POST Brexit

***This guide is mainly for people who are choosing to move and sustain themselves economically, i.e. retired individuals or those living from savings. It is not relevant for anyone considering self/employment in Italy. Different rules may apply in those cases***

Post Brexit (non EU citizen) elective residency application process

Step 1: Make an appointment at the Italian Consulate in your home country – this can takes months!

Step 2: At this appointment you need to complete a request for a visa granting you a right to live in Italy for more than three months in any six month period. You will be required to submit information on where you intend to stay (a property or rental, and evidence of specific accommodation), proof of your ability to support yourself financially, with evidence of income of at least €31000pa per single person or €38000pa for a couple, although this may be flexible depending on a) who you are speaking with and b) which region of Italy you may be moving to. You will also be required to prove that you have sufficient private health insurance cover and will not be a burden on the Italian health care system. The visa will be granted within 90 days of application being submitted.

Step 3: Once you receive the visa and make your move to Italy, within eight days you will need to make your request for a Permesso di Soggiorno (right to stay). This can be obtained from the post office. This process can take weeks, even months to issue and you will be informed that you need to go to your local Questura once it is granted, to pick up the certificate. The permission will normally be issued on a one or two year renewable basis for five years, after which time you can apply for a long term permission.

This is a very brief overview of the procedure, but as you may have understood, the process from start to finish is likely to take months, possibly years, and will probably need a lot more planning to make the move. In addition, there are much higher minimum income and savings requirements. However, as things stand you can still apply as a EU member state citizen until 31st December 2020 and most of the EU member benefits will carry forward after Brexit provided that the application is submitted before Brexit date.

Residenza Italy

The NO-HASSLE guide to getting residency in Italy before Brexit

So let’s examine the process of attaining residency as things currently stand and see why, if it is possible for you, it might be better to try to get residency before Brexit.

Going along to the comune/municipio office and requesting residency is a relatively easy process, but can be cumbersome if you are not prepared (it took me five visits to the Municipio in Rome to receive my residenza). You will inevitably run into people who have formed opinions about Brexit already and may refuse your application on the basis of the UK having left the EU already. This is incorrect and you would do well to go armed with the Italian ministry circular which says as much. You can find that document HERE. There are a few simple things you need to provide, but they may deem your evidence unsatisfactory for their requirement. Knowing the pitfalls of each criteria can be the difference between multiple failed visits to make the residency request or one successful visit.

The three basic items which you will require (apart from identification) are:

1. Evidence of sufficient economic resources to stay in Italy
2. Evidence of health insurance to cover at least the first year in Italy
3. Evidence of a place to stay

Whilst these three items might seem at first glance to be relatively simple to provide, there are some idiosyncrasies that trip people up and which can cause delays. Given that time is no longer a luxury then knowing the details could help. So, let’s deal with each one in turn.

[cq_vc_accordion contentcolor=”#333333″ titlecolor=”#957b00″ arrowcolor=”green”][cq_vc_accordion_item accordiontitle=”1. Evidence of sufficient economic resources to remain in the country”]The first thing to understand is that this requirement is governed by regional authorities and is very much at the discretion of local services as to whether they will accept you in their comune or not based on your evidence of income, savings, pensions etc. Rome or Milan, for example, will have very strict rules and will adhere to them rigidly. A small comune in Abruzzo, for example, might be more relaxed as they are happy to have an influx of foreign money into the area. However, it is worth checking with your local comune first to see if they have any minimum income levels for which they would need to see evidence. At the time of writing, the minimum income requirement for the Roma Capitale comune is €5.824,91pa and they would typically expect to see approximately €10,000 in savings as an emergency reserve. However, these figures can be subject to interpretation depending on who you are speaking with on any particular day! So be prepared.

Make sure you take both the original and copies of any documents with you to any meetings, including bank statements showing regular income payments, or pension statements demonstrating the amount of money you have in the fund and any regular income payments from it. Additionally, if you have any savings and/or investments then take recent statements along as well.

Remember to only present documentation that you are asked for, so as not to open a can of worms which could generate requests for additional documentation. [/cq_vc_accordion_item][cq_vc_accordion_item accordiontitle=”2. Evidence of health insurance to cover at least the first year in Italy”]This factor seems to be the one that trips most people up when making an application for residency and it comes as no surprise. The EU requirements for a change of residence clearly state that when transferring EU member state, you must have sufficient health cover provision to not be a burden on the health care system. (If you are employed then this doesn’t apply as you will be automatically enrolled in the health care system when paying social security contributions.)

The confusion derives from the following factors:

i) That all EU citizens have an emergency health card which would cover you for travel within the EU area. This is correct. In Italy it is known as the TEAM card and is link to the tessera sanitaria and in the UK it is called the EHIC. However, this card only provides temporary emergency cover for medical care during visits as a tourist in the EU area and not any longer term protection. Therefore, making an application for long term residency cannot, by definition, be covered by a short term medical provision agreement.

ii) Another assumption is that once you are resident in Italy you can apply to make a voluntary contribution to the health care system to receive full medical care (see document HERE). This is correct and the price is relatively cost effective depending on your annual total income. However, here is where a classic Catch 22 exists. You cannot register for and pay for healthcare in Italy until you have residency and you cannot have residency until you can demonstrate that you have adequate medical insurance cover in place. Therefore, an interim arrangement is needed as per point iii) below:

iii) It is assumed that a health care insurance needs to be a full provision medical insurance policy, e.g. Bupa. This is not the case and could cost thousands for full medical care benefits which are not needed for the purposes of making a residency application. In fact, we need to refer, once again, to the EU rules regarding residency. The rules state that if you are not working and have sufficient economic resources to live on then you need to provide yourself with the equivalent S1 reciprocal agreement on healthcare for retired member state citizens, until such time as you are eligible for the S1 or have alternative arrangements, e.g. annual voluntary payment into the Italian health service.

To resolve this you need to take an insurance policy on a one year renewable basis, which is acceptable for the purposes of obtaining residency and that can be cancelled from the second year in the case that you can make the application for the annual voluntary payment.

Speak with a good insurance agent and ask for cover for the codes: E106, E109, E120 and E121. These are the specific codes which need to be covered for insurance purposes. However, it would be sensible to ask the insurance agent to check with your local comune in the case that they have additional regional or local provisions that they would also want to cover. My advice has always been to stick to one of the main insurance companies in Italy rather than going through smaller companies. The main players would be Generali, Zurich, Allianz, Groupama and UnipolSai, as examples. A policy of this nature may cost a few hundred instead of a few thousand depending on your age and pre-existing health conditions. [/cq_vc_accordion_item][cq_vc_accordion_item accordiontitle=”My tips for a better residency application”]In addition to the above, here are a couple of tips which you might find useful.

An email pec
You might be thinking, what is an email pec? It actually stands for Posta Elettronica Certificata and I find it is one of the most useful things to have in Italy. A few years ago the government introduced legislation to allow electronic communication between individuals and municipal offices/agencies, police and also companies. However, they rightly had suspicions about the efficacy of traditional email channels because of the inability to confirm the identity of the individual sending the email. Enter: pec email.

Pec email is an email account that can be opened for about €30pa with a lot of service providers and during the opening process you are required to provide identification (copy of passport and/or ID card) to clear a security check. Once passed, the account is opened and you will be able to communicate freely with most official offices. Any email you send is certified as having been sent from you, but in addition you receive a receipt when the email has been received and accepted by the receiving party.

This is useful in many ways, but specifically with regards to residency it does mean that you can submit an application to your comune by sending all the necessary information via the pec email. (Check the comune website for their specific email pec to which you can send documents). For instance, if you are unable to return to Italy, for whatever reason, and want to submit your application before Brexit date, then it can be done via pec email.

Residency applications will be backdated to the date which you officially submitted the application (with correct documentation), so for any applications submitted by pec, or in person, before Brexit date, but then formally approved afterwards, you ‘should’ be granted residency from the moment of application.

You will also find an email pec useful if you have to submit documentation to the police, other government agencies and even some companies. For the cost of approx €30pa I think it’s worth it, although responses to your emails will be few and far between and any follow up may need to be done in person or on the phone. Expect to do some follow-up![/cq_vc_accordion_item][/cq_vc_accordion]

The best tax day of the year 2020
July 5th

A little known point about residency and tax, in Italy, is reference to the 183 day rule.

This rule states that if you are considered resident in Italy for less than 183 days per annum, then you are not considered tax resident in the country for the full tax year (different rules apply to employed persons). So, for calendar year 2020, if you take residency after the 5th July then you are assured to be considered non resident for the full tax (calendar) year and your first taxable year will be 2021.

This might be important for anyone who is thinking of applying now, but might like to remain tax resident elsewhere for the year 2020.

It will not affect your ability to get residency in Italy in 2020, but it will merely mean that your taxable year of residency will not start until 2021.

A useful piece of information if you need to look at your financial arrangements and how you can streamline and simplify them to make them more tax effective for life in Italy. The transition year is always the most important because of the ability to use cross border financial planning opportunities to their fullest.

And that, in brief, is your no-stress guide to to obtain residency in Italy as an EU citizen. However, whilst I write the words ‘no-stress’, they don’t correspond with my experience of municipal offices in Italy, or indeed the experience of many others. Always expect the unexpected.

I wish you or anyone you know all the best of luck making an application for residency in Italy, pre-Brexit, and who knows, we may even be in for an extension again. My guess would be at the witching hour on Dec 23rd so as not to ruin Christmas too much for the retailers and companies that will suffer most from a hard Brexit. Non vedo l’ora!

Being prepared for BREXIT in France

By Katriona Murray-Platon
This article is published on: 11th March 2020

On 31st January 2020, the UK left the EU. However, the real effects of Brexit, for those of us living in France, will not properly be felt until after the 31st December 2020 (what an interesting New Year’s Eve that will be!) and thereafter. Hopefully, by that time we will have a clearer idea of what our rights and responsibilities are. Until then there will still be much speculation and media noise, which may be just as confusing as it has been over the past four years.

One thing Brexit has established, from the very beginning, is that British citizens living in France, or planning to settle in France, need to get their affairs in order and decide where they would like to live for the foreseeable future. As British citizens we can always return to the UK if we so choose, but if we want to continue to live in France we must show that we have lived here continuously for the last five years or that we intend to continue living here in future.

The next few months are going to be very interesting and it is more than ever important for British citizens to consider some important financial changes.

Pensions after Brexit
In 2006, the UK introduced a law making it possible for UK private pension benefits to be transferred to a Qualifying Recognised Overseas Pension Scheme (QROPS), provided that the overseas scheme meets certain qualifying conditions.

For those pensions that can be transferred there are many benefits including:

  • No obligation to purchase an insurance company annuity, at any time
  • The potential to pass on the member’s remaining pension assets to nominated beneficiaries on death with minimal or no death duty payable. By comparison, currently a tax charge at the beneficiary’s marginal rate can be applied in the UK, where the member is over age 75 at death
  • A wider choice of acceptable investments offered, compared to UK pension plans
  • The underlying investments and income payments can be denominated in a choice of currencies, which can potentially reduce exchange rate risk
  • Potential to receive a larger amount of Pension Commencement Lump Sum compared to UK schemes
  • Depending upon the jurisdiction where the QROPS is set up, income payments may be made without the deduction of local taxes, meaning that income will only be taxed in accordance with the law of the jurisdiction where the member is resident

In 2017 the UK government announced its intention to introduce a new 25% Overseas Transfer Charge (OTC) on QROPS transfers taking place on or after 9th March 2017. This charge does not, however, apply where the QROPS is in the European Union (EU) or EEA and the member is also resident in an EU or EEA country (not necessarily the same EU or EEA country) and remains EU or EEA resident for the next five full UK tax years.

Many of those who work in the industry believe that after the transition period, it may no longer be possible for British citizens to transfer their pensions into an EU QROPS without incurring the 25% charge.

QROPS may not be suitable for everyone and much will depend upon the nature of the UK pension benefits being considered for transfer, as well as the person’s attitude to investment risk. Transferring a pension to a QROPS is not a decision that should be taken lightly nor in haste and proper financial advice with an experienced adviser is essential. Even when the decision has been made to transfer the pension it may take a good few months to complete, which is why, if you are even considering this possibility, it is important to contact a local adviser to explore what your options are.

Taxes after Brexit
As tax between the UK and France is determined by the Double Tax Treaty, this will not be affected by the fact that the UK has left the EU. However, whilst not directly taxed, a lot of UK income, such as UK rental income, is added to the taxable base and increases the tax margin of the French taxpayer. If you intend to live in France, you may want to consider whether it is really in your interest to hold onto UK assets.

It is possible to protect your capital investments in France and ensure that they can grow in a tax efficient environment by way of an Assurance Vie policy. French Assurance Vies or French approved foreign Assurance Vies offer valuable benefits when it comes to income tax, inheritance tax and estate planning. Foreign portfolios and bonds are not treated as Assurance Vies and any gain is subject to tax and social charges irrespective of whether this income is taken or whether it is brought into France. If you are French tax resident, you are taxable on your worldwide income in France. Proving that you are French tax resident will be an important factor for establishing the Right to Remain in France.

Being resident in France does not necessarily mean that all your assets have to be in France or have to be in euros. There are many opportunities for holding sterling based diversified portfolios in a tax efficient manner.
For anyone intending to live in France for the foreseeable future, be aware that today’s valuable financial planning opportunities are unlikely to remain beyond the short term (31st December 2020 could be an important date in this respect). Contact me, Katriona Murray, and I will be happy to arrange a meeting.

Stock markets falling, should I sell?

By Charles Hutchinson
This article is published on: 6th March 2020

06.03.20

There are four big subjects dominating the public arena at present: life after Brexit, life after the coronavirus, life after climate change, life after the dramatic falls in the global markets.

We live in an interdependent world where news is instant across all continents (although I’m not sure whether the penguins are interested). We are aware of climate change, the antics of Widow Twanky Trump, the spread of the coronavirus and Brexit (an outdated game in which the British people have kicked off in the hope of a repeat performance of their imperial past). Hopefully we have taken onboard the catastrophy of climate change in time (not Widow Twanky, yet) before we are reduced to a desert of Mars proportions. Hopefully the coronavirus threat is a storm in a teacup. Hopefully Brexit will work out. These are all uncertainties – except one: the global stock markets.

All life is cyclical; this is enshrined in history. Take any historical event of extreme proportions; the pendulum will at some point begin to swing back the other way. The only possible exception I can think of is the reincarnation of the Dinosaurs and the Dodo. There will be other tyrants, exterminations, plagues and climate changes at some point; but in our lifetime at least you can depend on the markets bouncing back. Why? As I have described in other articles, the markets are like the tides, they come in and they go out. The sea does not disappear over the horizon in a great hiss of steam into the sunset. Money has to have a home and it is to the markets, at the end of the day, that money’s guardians largely turn. In a post apocalyptical world, bartering will still continue, even if it is with seashells and potatoes. Money is merely the lubricant of trade, whether it be between you and I or corporations or countries.

Believe it or not, the professional market traders relish market falls (or corrections, as they call them) because it presents them with the buying opportunities which are needed to make money. The falls are caused by a mixture of inexperienced emotional investors and market makers (to create the buying opportunities). What is sure now is that markets will move up again and it might be sooner than expected. No person, company or country can stay in lock down for long. We have to eat and carry on our normal lives. Sooner or later, a cure for COVID-19 will be found (they announced yesterday promising results with HIV and Ebola antiviral drugs). The old may be vulnerable, but they don’t need to go out to work, tilling the fields or driving the engines of manufacturing. They are mostly at home enjoying a good rest after a lifetime’s toil. So with a bit of care we may be able to keep them protected until the virus burns itself out.

The lesson is clear: stay invested, or if you are a little brave buy into these low levels to enjoy a potentially better return and maybe average down (don’t commit all your spare investment capital at once but buy into the falling markets in stages to increase the odds of buying near the bottom to increase your potential profits).

Remember, Spectrum does not risk our clients’ hard earned capital. We just know the tide will come in again and as long as we are in sound and sturdy boats (investment funds), it will take everyone back up the beach to new heights. Spectrum chooses fund houses for their experience and expertise, some of whom have been around for more than 200 years. It is their fund managers’ job to react to world events on a daily basis. We use them to protect our clients’ money. We arrange for our clients to access these superb funds through structures called Investment Bonds (or Insurance Wrappers) which are Spanish compliant and which offer unparalleled security (against corporate collapse) and low taxation with both income tax in Spain and the UK and also inheritance tax in Spain.

If you would like to talk to me more about this subject and the points raised, please contact me as per below and I would be happy to discuss this further.

2020, here we come…

By Gareth Horsfall
This article is published on: 6th January 2020

06.01.20

This is the start of a new decade and it will surely bring fresh challenges for all of us, but there is much to look forward to as well.

Climate change is constantly being talked about, we can look forward to a reduction in single use plastics from 2021 in the EU, electric car sales are showing the highest growth in numbers, our current model of economic growth is under question and more focus is being placed on corporate welfare of customers, employees and ecological footprint. In addition, technology is bringing about massive disruptive change to old industries who have had their feet under the table for too long. This is not all without serious challenges but if we work together we can get the results that we need for the benefit of everyone, no matter which side of the political spectrum we might sit on.

My biggest lesson over the last decade

We can’t expect everyone to agree with us about everything. Brexit has been an exponentially steep learning curve for me, one which I have learnt alot from: Tolerance more than anything, but also challenging norms and preconceived ideas. I also learnt that illness is the most democratic thing of all: it spreads regardless of money, age, sex or political views.

My resolutions for 2020

(I make them once a decade)

I aim to reduce my use of social media massively to avoid any influence from fake news (If Sig. Zuckerberg won’t regulate it, then I am afraid I won’t use his platform as much), to read alot more books, try and understand more the people who have differing views from myself, attend a Salvini rally at some point (this is a strange one, but I attended a Sardine manifestazione in December 2019 and I wanted to get a balanced view, so committed myself to attending a political rally of Salvini – watch this space), continue to reduce plastic (Oh my god, how hard is that in Italy), eat less meat and maintain a healthy lifestyle.

And on those bombshells, I would like to wish you first and foremost the best health, and also happiness for the next decade.

Happy New Year 2020

My next article ‘8 reasons to be wary of yourself in 2020’ will be released shortly.

Brexit – What now?

By Katriona Murray-Platon
This article is published on: 18th December 2019

Some of you, like me, might have woken up on Friday and after hearing the election result felt utterly depressed. Irrespective of how the vote could or should have gone, or who you may have voted or wanted to vote for, this result will seriously affect the Brits living in Europe. Brexit is now more likely than ever, so what does this mean for us? Well luckily, there is someone who is somewhat of an expert on the matter, Professor Sébastien Platon, Professor in European Law at the University of Bordeaux and incidentally my husband! Over breakfast I asked him a few questions.

So, what now?
The British parliament must first pass the EU (Withdrawal Agreement) Bill, and then they have to agree on the Withdrawal Agreement itself. Given that the Conservatives now have a majority it is likely to be passed. Either later or at the same time, the European Parliament also has to agree on the withdrawal agreement. If all of this gets done by the 31st January, Brexit will happen as planned. If not, the UK will have to request ANOTHER extension which would have to be agreed by the other 27 member states.

During the transition period are all European rights maintained?
Apart from the right to vote and run as a candidate in EU elections and municipal elections, the right to participate in European citizens’ initiatives and the UK’s right to vote on EU laws, all rights, including the right to free movement, are maintained during the transition period.

Does a British citizen who has not yet settled in France still have the right to do so after 31st January?
Yes. Up until 31st December 2020 all British citizens can come and settle in the EU. After the transition period, those who have established residency in the EU and wish to bring their family members (spouses, partners, direct descendants under 21 or dependent, direct relatives in the ascending line) to live with them can still do so.

Can the transition period be extended?
Yes, if the UK and EU agree to extend the transition period. But, unlike the Brexit extensions, they cannot ask for an extension the night before the 31st December 2020. A decision has to be made before 1st July 2020 extending the transition period for up to 1 OR 2 years. British citizens would therefore have until the end of the transition period (or extended period) to settle in the EU.

What about healthcare?
During the transition period, the EU social security coordination rules will continue to apply. The British who reside in France (or any other member state) and are in the UK health system but not the French health system can continue to benefit from this health cover as normal. After the end of the transition period, these rules will continue to apply to:

• UK nationals subject to the legislation of a Member State at the end of the transition period,
• UK nationals who reside in a Member State while being subject to the legislation of the UK at the end of the transition period,
• UK nationals who pursue an activity as an employed or self-employed person in one or more Member States at the end of the transition period and who are subject to the legislation of the UK,
• Their family members and survivors
These persons will be covered as long as they continue, without interruption, to be in one of these situations involving both a Member State and the UK at the same time.

What about pensions?
For the persons I’ve just mentioned, the time worked in the UK will count towards an EU pension and inversely any time spent working in France would contribute towards entitlement for a UK pension should they wish to return to the UK when they retire.

Do we need to apply for cartes de séjour?
During the transition period you do not need them. After the transition period each member state has the right to require UK citizens to apply for a new residence status, the sole purpose of which is to verify whether the applicants meet the conditions set in the withdrawal agreement. If they do, they have a right to be granted the residence status and the document evidencing that status (which will NOT be a “carte de séjour”). The French administration cannot refuse this status if you meet the conditions. The deadline for submitting the application shall not be less than 6 months from the end of the transition period. The host State has to ensure that any administrative procedures for applications are “smooth, transparent and simple, and that any unnecessary burden are avoided” with applications being “short, simple, user friendly and adapted to the context of” the agreement. Only once the agreement has been ratified will we know if and how the French Government wants to proceed on the matter.

Whilst I do not agree with Brexit and wish things had happened differently, at least after four years of uncertainty there may now be some progress. The pound bounced back up on Friday and this election result is likely to have a positive impact on the markets and portfolios.

Sterling after Brexit

By Gareth Horsfall
This article is published on: 3rd December 2019

03.12.19

In this article I want to look at what has happened to sterling since Brexit and the outlook. In 2015, when the world seemed a lot more secure, GBP v EUR was trading over 1.40 and life seemed good. Anyone holding GBP based assets and incomes would find that their money went a long way. Today it is trading at 1.17.

With all this confusion it inevitably causes some uncertainty. This seed of uncertainty has shown itself nowhere better than in the continued daily swings of GBP v EUR.

It has been a while since my last E-zine. I am sure that it won’t go unnoticed that this E-zine is coinciding with the UK general election on December 12th. At the present time the Conservatives are polling for a small majority, but it would seem to be anyone’s guess as to the ultimate result.

A RECENT HISTORY OF STERLING
Around the start of 2016, after the Brexit fuse had been lit, sterling started to fall as the Leave campaign gained ground and the markets reacted nervously to a potential Leave outcome.

sterling history

Immediately after the Referendum, June 24th 2016, when the result was announced, GBP fell the most against a world basket of currencies since the introduction of free floating currencies in 1970. On June 24th 2016 it had it’s largest ever one day fall of 13%. To put this into context, when George Soros famously ‘broke the Bank of England’, and made billions by betting against sterling in 1992, resulting in its subsequent ejection from the exchange rate mechanism, sterling only fell by 4.3%. In 2009 at the height of the financial crisis sterling lost 16% but over an 11 trading day period between 8-23 September 2009. The Brexit effect was huge.

I remember calling some currency brokers in the City of London early in the morning of June 24th 2016 and asking what was happening on the trading floor. The only responses I got were “fortunes have been made this morning!” and “it’s chaos over here”.

Roll on 2019 and as you will see from the charts below, since 2017, after the drop, sterling has traded within a range of values and has only experienced a ‘relative’ peak around the middle of this year.

STERLING CHART 2015 TO 2019

STERLING CHART 2015 TO 2019

STERLING CHART 2017 TO 2019

WHAT DOES THE FUTURE HOLD FOR GBP V EUR?
In my travels around Italy to talk to clients this is the most asked question. Since the highs of 2015, there has been an approximate 20% loss in the value of your GBP assets and incomes. For anyone living on a fixed income, i.e. pensions or living from assets, this is starting to have an effect. In the past year the number of clients asking to top up their income from their assets has increased. This withdrawal effect represents a net reduction in your overall asset base, when that money might have been spent on future medical needs, inheritance for children, or just for future living costs.

Therefore, it is no surprise to me that I am asked frequently for my opinion on the matter, and additionally whether you should be thinking about converting assets into euro, to hedge against further falls.

MY RESPONSE
I have been speaking to asset managers in London and currency specialists over the last year about this subject to try and get a feel for the ‘word on the street’. I can tell you that the theme has always been the same and nearly all asset managers say the same thing. Sterling is desperately undervalued if we measure it against the fundamentals such as productivity of the economy, GDP v debt etc. Very simply, this means that when compared against all measures, sterling should be trading quite a bit higher against the Euro. The uncertainty surrounding Brexit is depressing the value more than anything else, rather than the actual event itself.

The rational thinking is that the currency markets, at this point in time: 3 years after the vote, are desperate for an outcome, whether that be a deal or remain (we cannot exclude no-deal, but for now it appears to have been put to rest). If we are to assume that the Conservatives win a majority (no matter how small) then there could be a bounce in sterling in anticipation that Boris Johnson’s deal is likely to be passed in parliament and provide the certainty that the financial markets are desperately searching for. The deal being passed ‘could’ create conditions for ‘another rimbalzo’ in the price of sterling. My guess is that it would bounce quickly after any decision was taken, although these are only educated guesses.

caution

You may now be thinking, ‘how much would it likely rise?’. Well, if I knew that then I would be a very rich man indeed. In all honesty, no one can say for sure. I am not a betting man but I wouldn’t be looking to place any sizeable bets on it even if I were.

I remember that at The Spectrum IFA Group annual conference in January this year in Portugal, we had a speaker, David Coombes from Rathbones Asset Managers. He gave his outlook for sterling based on the 2 parameters he had set for the fund he manages. In the event of no deal he had GBP/EUR at 0.9 and in the event of a return to remain he placed GBP/EUR at 1.4. He went on to say that for any scenario in between you can pick your own point.

Going further in my own assessment of things, I personally think that if a deal is passed, or remain wins (in my dreams), then sterling is going to rise, but by how much I wouldn’t like to say. However, we must remember that ‘getting Brexit done’ is a illusion in itself. Passing a deal in parliament is only the start. The UK then has to formally leave the EU and start negotiating trade deals around the world. Some will likely fall in place very quickly, Canada, Australia, South Africa, maybe even the USA, but the deal with the EU and important future trade deals with India, China etc will likely take years and may not be as good as Brexiteers might hope for.

To give you an example of how difficult these trade deal negotiations might be, let’s take the example of Switzerland versus China and their trade deal which they struck in 2013. Everyone is aware of the rapid growth of the Chinese economy and how almost every nation in the world would like to strike a free trade deal with China to access the billions of growing middle class individuals and a rapidly growing consumerist economy. Switzerland is one of very few countries outside the Asia Pacific region to do so. However, Switzerland had to make some large sacrifices to get that deal, mainly that the Chinese negotiated FULL and free access to the Swiss economy for a period of 10 years during which time Switzerland would have only very LIMITED access to certain sections of the Chinese economy. The Swiss deemed this to be a good deal! It just goes to prove that deal making around the world is not going to be as easy as the Leave campaign would like us to believe.

Any protracted deal making phase may well be a negative effect for sterling and after any initial bounce on the back of some certainty, you might see sterling enter a volatile period once again, certainly as the unravelling from the EU also takes effect. I don’t buy into Project Fear and think that the UK will find its way in the world outside the EU, but like any divorce it will get messy for some time. The question is for how long and what impact will this have on the currency.

MY ADVICE
In summary, if you have money in sterling and ask me for advice, I will say that you should not convert it into euro right now. I will caveat that with the fact that neither I nor the best currency expert in the world can tell you what will happen, but it is a reasonable assumption that sterling will rise when the next steps of Brexit are resolved one way or the other. What happens after that is anyone’s guess. If you need to convert to euro then I would suggest doing so in tranches, or holding on until after Dec 12th to see what happens. Then pick your time, keep an eye on the rate and convert on the peaks.

(I am adding this note after having completed this E-zine. Our rep from Currencies Direct, our preferred currency exchange partner, called me about 5 minutes after completing this text and we had a chat about GBP expected movements in relation to the elections. She said that they are thinking that GBP v EUR could bounce to the mid 1.20’s if Boris Johnson wins the election with a majority. This is not a prediction, merely a hypothesis!)