Viewing posts categorised under: France

Successful estate planning in France – Having a will is just the beginning

By Spectrum IFA
This article is published on: 16th October 2017

16.10.17

When I left school, I knew more about Shakespeare than I did about personal finance. While we gain academic knowledge through education, and professional knowledge through work, there is no formal channel for learning the key life skill of money management. Most of us pick it up in the same way we acquire our wealth – very few have a strategy, even fewer have a plan.

The problem is that personal finance can be complex, sometimes very complex. Mistakes can be costly. This is especially so in France, even for the French themselves. How much more so then for those of us whose first language is not French. And one of the most complicated areas of personal finance in France is estate and inheritance planning.

Successful personal finance is not just about organising our financial affairs so that, while we work hard for money, our money works hard for us. It is also about putting in place arrangements to transmit that resultant wealth in the best conditions to the chosen ones we leave behind.

The passing of a loved one can be one of the most stressful moments of our lives, one where our families are at their most vulnerable. It is then that we need to rely on the robustness of the arrangements that we have already put in place. In spite of this, most of us do not have even a basic will.

The starting point of any successful estate planning starts with defining the ultimate goal. There are three aspects: –

The capacity to transfer at death whatever assets remain to your preferred beneficiaries in proportions of your choosing
In the most cost efficient and tax intelligent manner with the minimum amount of deductions
While ideally retaining and maximising as much control as possible during your lifetime

The bad news is that in France ‘forced heirship’ succession law and inheritance tax rates of up to 60% can make this difficult to achieve. For families with complicated situations, such as step children, this can be especially problematic and UK arrangements will not necessarily function in France and may have unpredicted results. Moreover, finding a proactive English speaking French lawyer prepared to take the time to fully understand your situation and needs can be both challenging and expensive.

The good news is that there is also a complexity of legal and financial planning strategies that can be used when defining your plan to help you achieve your goals and get you nearer to the ideal goal, as defined above. Here are some examples: –

A will with the possible addition of a ‘clause d’attribution intégrale au survivant’ or ‘clause de préciput’. Given Brexit, hand written wills in English should not be relied on in practice.
A change of marriage regime, typically from ‘séperation de biens’ to ‘communauté universelle’ to protect the surviving spouse
Brussels IV (EU Regulation 650/2012) allows you to avoid French succession law (not tax) by opting for the law of your country of nationality rather than of your residence
Adoption of step children
Gifts (‘donations’)
A strategy of dismemberment (‘démembrement’) of real estate into life interest (‘nu-propriété) and usufruct (‘usufruit’). This can significantly reduce the inheritance tax bill, especially if done sooner rather than later via a will at time of death
Use of assurance vie as tax optimisation wrapper for financial assets, ideal for transmitting inheritance to distant relatives, friends or third parties
Careful editing of the beneficiary clause within an assurance vie policy
A strategy of dismemberment can also be applied to certain assurance vie policies.
Use of inheritance tax free allowances –the standard 100,000 EUR per child per parent and a second one via assurance vie adds another 152,500 EUR per beneficiary.

So make it easier on your lawyer and help him to help you. Given the complexity of both the issues and the solutions, ask for a free holistic review of your situation from your financial adviser so you can already begin to define your needs and goals, and have an idea of what strategies are possible.

Thus prepared, you will make your lawyer’s job easier and so less time consuming. As well as achieving peace of mind, you might even save yourself some fees!

Planning to retire to France – don’t get caught in the tax trap!

By Sue Regan
This article is published on: 18th September 2017

18.09.17

Retiring to France can be dream come true for many people. The thought of that ‘place in the sun’ motivates us to save as much as we can whilst we are working. If we can retire early – so much the better!

In the excitement of finding ‘la belle maison’ in ‘le beau village’, we really don’t want to think about some of the nasty things in life. I am referring to death and taxes. We can’t avoid these and so better to plan for the inevitable. Sadly, some people do not plan before making the move to France and only realise this mistake when it is too late to turn the clock back.

For example, investments that are tax-free in your home country will not usually be tax-free in France. This includes UK cash ISAs and premium bond winnings, as well as certain other National Savings Investments, all of which would be taxable in France. So too would dividends, even if held within a structure that is tax-efficient elsewhere. All of these will be subject to French income tax at your marginal rate (ranging from 0% to 45%) plus social contributions, currently 15.5%.

Gains arising from the sale of shares and investment funds will be liable to capital gains tax. The taxable gain, after any applicable taper relief, will be added to other taxable income and taxed at your marginal rate. Social contributions are charged on the full gain.

If you receive any cash sum from your retirement funds, for example, the Pension Commencement Lump Sum from UK pension funds, this would be taxed in France. The amount will be added to your other taxable income or under certain conditions, it can be taxed at a fixed rate of 7.5%. Furthermore, if France is responsible for the cost of your healthcare, you will also pay social contributions, currently around 7.4%.

Distributions received from a trust would also be taxed in France and there is no distinction made between capital and income – even if you are the settlor of the trust.

As a resident in another country, it would be natural for you to take advantage of any tax-efficiency being offered in that jurisdiction, as far as you can reasonably afford. So it is logical that you would do the same in France.

Happily, France has its own range of tax-efficient savings and investments. However, some planning and realisation of existing investments is likely to be needed before you become French resident, if you wish to avoid paying unnecessary taxes after becoming French resident.

I mentioned death above and as part of the tax-efficient planning for retirement, inheritance planning should not be overlooked. France believes that assets should pass down the bloodline and children are ‘protected heirs’, so they are treated more favourably than surviving spouses. Therefore, action is needed to protect the survivor, but this could come at a cost to the children – particularly step-children – in terms of the potential inheritance tax bill for them.

Whilst there might be a certain amount of ‘freedom of choice’ for some expatriate French residents, as a result of the introduction of the EU Succession Rules, this only concerns the possibility of being able to decide who you wish to leave your estate to and so will not get around the potential French inheritance tax bill, which for step-children would still be 60%. Therefore, inheritance planning is still needed and a good notaire can advise you on the options open to you relating to property.

For financial assets, fortunately there are easier solutions already existing and investing in assurance vie is the most popular choice for this purpose. Conveniently, this is also the solution for providing personal tax-efficiency for you. There is a range of French products available, as well as international versions. In the main, the international products are generally more suited to expatriates as a much wider choice of investment options is available (compared to the French equivalent), as well as a range of currency options (including Sterling, Euros and USDs).

If possible, you should seek independent financial planning advice before making the move to France. A good adviser will be able to carry out a full financial review and identify any potential issues. This will give you the opportunity to take whatever action is necessary to avoid having to pay large amounts of tax to the French government, after becoming resident.

Even if you have already made the move to France, it may still worth seeking advice, particularly if you are suffering the effects of high taxation on your investment income and gains or you are concerned about the potential inheritance taxes for your family. A full review of your personal and financial situation enables us to identify any issues and recommend solutions that will meet your long-term goals and objectives.

The above outline is provided for information purposes only and does not constitute advice or a recommendation from The Spectrum IFA Group to take any particular action on the subject of investment of financial assets or on the mitigation of taxes.

Update – Le Tour de Finance, Domaine Gayda, 6th October 2017
This year’s event is now fully subscribed but we are keeping a reserve list in case of any cancellations, so please let me know if you would like to be added to the list. Alternatively, if you would like to have a confidential discussion about your financial situation, please contact me either by e-mail at sue.regan@spectrum-ifa.com or by telephone on 04 67 24 90 95.

The Spectrum IFA Group advisers do not charge any fees directly to clients for their time or for advice given, as can be seen from our Client Charter

How often should I review my financial situation?

By Amanda Johnson
This article is published on: 8th September 2017

08.09.17

How often should I review my financial situation?
This is a good question. Whilst there are no hard and fast rules as to when is a good time for a financial review, here are a few questions you can ask yourself to help you decide if the time is right now:

Have my circumstances changed since you last spoke to a financial adviser?
These could include a change in health, new jobs, reduction in income, bereavement or simply a change in personal goals since you last reviewed your finances.

Have any recent articles or programmes caused you concern?
The internet provides us with a wealth of information, through news programmes and social media which is sometimes difficult to decipher.

Do you know how any investments you have are performing?
Financial performance on different investments is based on many factors and knowing how your money is invested can ensure that it matches your outlook.

How much tax are you paying on your investment?
To encourage people to invest, the French government allow for certain tax efficient investments which can reduce your annual tax bill.

When did I last review my finances or speak to an independent financial adviser?
If not in the last year or so, now may be the time to check that you are making the most of many straightforward investment and tax planning opportunities that are often overlooked.

Whether you want to register for our newsletter, attend one of our road shows or speak to me directly, please call or email me on the contacts below and I will be glad to help you. We do not charge for our financial planning reviews, reports or recommendations.

Now is the time to review your finances

By Sue Regan
This article is published on: 18th August 2017

18.08.17

At this time of year not many of us can really be bothered with thinking about pensions, investments and inheritance planning – there’s far more exciting things going on, like holidays, friends and family visits (as long as they don’t stay too long!) and the summer fêtes and festivals in just about every village and town in the region.

This is usually a quiet time for us financial advisers, but this year – not so much – perhaps it’s the “Brexit effect” that is causing more ex-pats to think about their financial future now rather than put it off until after the end of the silly season. Of course, there are still no clear facts as to how Brexit will impact on UK citizens living in France, so planning for it is not easy, but reviewing your situation now will give you a clearer idea of your financial future, whether your plan is to stay in France or return to the UK.

Of course, there is never a wrong time to review your financial health. Regardless of whether or not Brexit actually happens, or whether it is a soft or hard Brexit, things generally change over time, such as pensions and tax legislation, investment performance, physical well-being, income and capital needs………. the list goes on.

These are some of the things that a good financial adviser will discuss with you at a regular review meeting, to make sure that your finances are on track to meet your current needs and longer term goals. It is vital that your pensions and investments are structured in the best possible way to produce a suitable level of return and, at the same time, mitigate taxes as much as possible.

Also, as a French resident, your adopted or default marriage regime can make a huge difference to how your assets are treated for inheritance tax purposes and, by simply changing your regime with the help of a Notaire, the survivor of a couple can be much better protected from the French laws of forced inheritance, as well as other important benefits. Your financial adviser should be able to discuss these matters with you.

As I mentioned in my previous article, the very popular Tour de Finance is once again coming to the stunning Domaine Gayda in Brugairolles 11300, So, if you are concerned about your investments and pensions in a post-Brexit world why not join us at this very popular event where you can meet the team in person and listen to a number of industry experts in the world of financial advice. This year’s event will take place on Friday 6th October 2017. Places are by reservation only and it is always well attended so book your place early by giving me a call or dropping me an email. Our speakers will be presenting updates and outlooks on a broad range of subjects, including:

Brexit
Financial Markets
Assurance Vie
Pensions/QROPS
French Tax Issues
Currency Exchange

Financial advice is needed more than ever in uncertain times and doing nothing can often be an expensive mistake. Hence, if you would like to attend the event or would like to have a confidential discussion about your financial situation, you can contact me by e-mail at sue.regan@spectrum-ifa.com or by telephone on 04 67 24 90 95.

The Spectrum IFA Group advisers do not charge any fees directly to clients for their time or for advice given, as can be seen from our Client Charter

EU Pension Transfer from the EU Institutions – It is EUr money

By Spectrum IFA
This article is published on: 15th August 2017

15.08.17

Have you ever worked for any of the below institutions for less than 10 years? Go ahead, and have a look:

• European Commission
• European Council
• European Parliament
• EEAS
• European Court of Justice
• Eurocontrol

If yes, then carrying on reading this article, as an EU Pension Transfer will definitely be of interest to you. If not, then you’ll probably want to stop reading, unless you know someone in the aforementioned position.

To Whom It May Concern, if you have worked for less than 10 years at the EU Institutions (and have left), you will not have qualified for the gold plated, much coveted, EU Pension. I say much coveted, as no one is really making pensions like them anymore; as they are very, very expensive for the employer to maintain. Yet, they can be very, very good for you, the employee. Anyway, I digress. That is for another article.

As you will know by now, you have to work at the EU Institutions for at least 10 years (this can be interrupted, as long as the total is 10 years) before you qualify for the pension. If you leave before that time, then you are eligible for a severance grant which you can transfer into a scheme that has been approved by the EU. As it states in the EU Staff Regulations handbook:

“An official aged less than the pensionable age whose service terminates otherwise than by reason of death or invalidity and who is not entitled to an immediate or deferred retirement pension shall be entitled on leaving the service:

a. where he has completed less than one year’s service and has not made use of the arrangement laid down in Article 11(2), to payment of a severance grant equal to three times the amounts withheld from his basic salary in respect of his pension contributions, after deduction of any amounts paid under Articles 42 and 112 of the Conditions of Employment of Other Servants;

b. in other cases, to the benefits provided under Article 11(1) or to the payment of the actuarial equivalent of such benefits to a private insurance company or pension fund of his choice, on condition that such company or fund guarantees that:

I. the capital will not be repaid;
II. a monthly income will be paid from age 60 at the earliest and age 66 at the latest;
III. provisions are included for reversion or survivors’ pensions;
IV. transfer to another insurance company or other fund will be authorised only if such fund fulfils the conditions laid down in points I, II and III.”

The last 4 points are the most important to note as your money will not be transferred unless the approved receiving organisation adheres to those criteria.

WHY WOULD I TRANSFER?
Essentially, you have to, unless you like losing large sums of money. If you have not transferred by the time you have reached pensionable age, then your money disappears and is absorbed by the EU. If you die before you claim your money, then it is also lost. It will not be transferred to any beneficiaries as it is not a pension. When you leave, the amount that you leave behind is frozen and only increases at a very low interest rate; no further contributions are made on your behalf. So moving it when you leave allows you the opportunity to invest it into funds that could grow your money substantially over the years (depending on how close you are to retirement). For example, if you left the institutions at 40 years old, you would have at least 25 more years to grow your money. If you leave earlier, then you would have longer.

Moving it would also allow you better protect your financial future, make provisions for your partner or dependents/beneficiaries. It can be of benefit even if you decide to return to the EU Institutions.

There may be circumstances where it is not appropriate for you to transfer the money at that time, your particular situation will be evaluated by our pension specialist who will compile a report detailing the appropriateness of the potential transfer.

SOUNDS GREAT! WHAT NEXT?
We will conduct an evaluation of your situation and also the accumulation of your money at the EU. Once we have confirmed and agreed with you that transferring out is the right option for you, we will work with an approved provider to who complies with the requirements as stated above who will help set up your new pension. Then, as part of our ongoing service, we will review your pension and personal circumstances every quarter to ensure that you are always updated with the latest information. Even if you move countries, our service will continue.

We have established contacts with case handlers in the Office for the Administration and Payment of Individual Entitlements (the department responsible for calculating and transferring your money), and have developed the knowledge and expertise to ensure a smooth transfer, putting you in control of your money and helping you make the right decisions, as and when they are needed.

So, if you have no longer work for the EU Institutions and have less than 10 years’ service, you don’t like losing large sums of money, wish to protect your financial future, and potentially provide for your dependents/beneficiaries, then contact me either by email: emeka.ajogbe@spectrum-ifa.com or phone: +32 494 90 71 72 to see whether an EU Pension Transfer is suitable for you.

Is lending money to a government still low risk?

By Peter Brooke
This article is published on: 26th July 2017

26.07.17

If you buy a government bond, sometimes called GILTS (UK), BUNDS (Germany) or T-Bills (US), as an investment, then you are effectively lending that government money. Most portfolio managers say investors should have some bond exposure in their investment portfolios as they diversify away from other assets like shares.

How do Bonds work?
You start by buying a bond on ‘issue’ for a set issue price with a ‘promise’ to pay you back the same amount in a date in the future. In the meantime, the bond pays you a ‘coupon’ or interest in payment for you lending your money. The bonds are also traded on a ‘secondary bond market’ where the price fluctuates according to supply and demand but the coupon remains the same… this means that your interest rate changes depending on what price you pay for the bond.

You can also invest in ‘funds’ of government bonds which are managed by professional managers using new issue and secondary market bonds around the world to build a diversified portfolio… but are they as low risk as they are made out to be?

Traditionally these forms of investment have always been viewed as low risk, as governments, unlike companies or individuals can always ‘print money’ and so can always pay you back. This also means that the interest rate you receive (the coupon) will be lower than company bonds.

If we consider that RISK is the chance of loss then I would argue that these investments are no longer low risk. Right now, we are in an environment where interest rates are at all-time lows around the world, inflation is starting to bite and so the chance of an interest rate increase by central banks is high; even though the rate increases may be low.

If you are holding any bond and interest rates go up, then bond values will drop, therefore I would argue that at some point you are risking a capital loss by holding government bonds. Some analysts believe that a 1% increase in interest rates could lead to a 10% capital loss on most bonds. If this is the case are you now being compensated for this risk of loss? Well, no… interest rates on government bonds are around 1% now and so with inflation higher than 1% in most countries you are losing money on an annual basis too.

So, what can you do about it? The first option is to take a little more risk and swap your government bonds for high quality corporate bonds… the coupon will be greater and as long as the companies are in good health then they should be able to repay you at the end of the term… there are also funds of corporate bonds which diversify risk.

The corporate bond market is segmented by credit rating so be aware of the level of risk this can bring to your savings… “high yield” (Europe) or “junk bonds” (US) tend to behave more like shares.

Another option would be to diversify away from western government bonds into emerging market government bond funds… there is some extra currency risk, though this can help performance too. Finally, you can outsource the choice of the bonds you buy by using a Strategic Bond fund… this will invest in corporate, government and emerging markets bonds on a strategic basis and would be very diversified.

This article is for information only and should not be considered as advice.

Ignorance is not always bliss…………..

By Sue Regan
This article is published on: 17th July 2017

………..and, in the context of not structuring your investments to the tax regime of the country in which you reside, it can prove to be very costly.

Let’s take the scenario of the savings conscious UK investor who, over the years, has used some of their available cash to build up a nice portfolio of tax-free investments in ISA wrappers, but then decides to take up residency in France. From the date of moving to France the tax-free status of UK ISA is not recognised in France and any income or capital gains arising from the ISA portfolio become liable to French tax.

Not everyone is aware of the tax efficient structures available in France for longer term savings, the most popular of which is far and away the Assurance Vie, and, as a consequence, suffers the pain of incurring tax liabilities where there were none previously, not to mention the extra administrative burden (and accountancy costs) associated with completing the end of year tax return. In addition, they are missing out on the compounding effect that any unnecessary taxes would have on the growth of the portfolio, which, in itself, is a crucial factor which should not be underestimated.

It’s not only the tax-efficiency of ISAs that is affected but, if you have a UK financial adviser advising you on the management of your investments, then it is unlikely that they will be able to continue to give you appropriate advice due to your change in residency and tax regime. You probably wouldn’t have sought the advice of a French regulated IFA to manage your UK investments when you lived in the UK so it doesn’t make sense to expect a UK regulated IFA to advise you when living in a different tax jurisdiction to the one in which they are qualified and regulated.

Of course, making the switch from UK tax efficient savings to French tax efficient savings may not be without some cost at the beginning – but the longer term benefits are highly likely to far outweigh any initial cost. If you have not yet become French resident, by taking the initiative and disposing of your ISA portfolio beforehand, there would be no tax implications whatsoever.

An added attraction to the Assurance Vie is that there is no limit to how much can be invested and the longer you hold them the more tax-efficient they become. In addition, this type of investment is highly efficient for mitigating the potential French inheritance taxes so that your heirs can receive more of your wealth, instead of the French State.

The very popular Tour de Finance is once again coming to the stunning Domaine Gayda in Brugairolles 11300, So, if you are concerned about your investments and pensions in a post-Brexit world why not join us at this very popular event where you can meet the team in person and listen to a number of industry experts in the world of financial advice. This year’s event will take place on Friday 6^th October 2017. Places are by reservation only and it is always well attended so book your place early by giving me a call or dropping me an email. Our speakers will be presenting updates and outlooks on a broad range of subjects, including:

Brexit
Financial Markets
Assurance Vie
Pensions/QROPS
French Tax Issues
Currency Exchange

With a newly elected French government now in office and the forthcoming publication of the French Projet de Loi in the Autumn, the seminar will be an ideal opportunity to find out how any potential French tax changes may affect you, particularly as President Macron has promised changes to the wealth tax regime.

Tips on choosing a Financial Adviser?

By Amanda Johnson
This article is published on: 11th July 2017

11.07.17

This is a very important question and one raised many times in forums and during seminars. I think there are six key factors in choosing a financial adviser who will be right for you:

Can I work with the adviser?
A financial adviser is someone who is not just here for your needs today, but someone who will be around for the long term. As your needs change, your adviser needs to be able to go through these changes and tell you when the French or UK government make changes that can impact your financial position.

Who do they work for?
It is important that you get an understanding of the company your adviser works for. Google them, or look for forum threads, to see how other expatriates have found dealing with them. It is important to know not just that they have a good reputation, but that they are quick to act in the event of any issues which may arise.

Are they regulated within the country you live?
Whilst the UK can still “passport” financial products to the EU, there is no guarantee that this will continue seamlessly after Brexit. One way you can ensure whatever happens that you face the least amount of change is to deal with a company regulated in the country where you live.

What is the advisers experience and history with their company?
Has your financial adviser a history of financial advice and not just a background in financial services? You want to ensure that the knowledge they have is relevant to your financial needs. It can also provide comfort if you know your adviser has been with their current company for some time.

Can they provide testimonials from recent customers?
There are few better ways of putting your mind at rest than asking your adviser if you could speak over the phone to one of two of their existing customers. It provides great peace of mind, when looking at a new financial partner.

Are they open and transparent, regarding any costs and fees involved in using them?
When you first meet your adviser, ask them for any terms of business and how working with them would progress. Be sure to ask whether there are any upfront costs involved and what the ongoing fee structure will be. You should know in advance of any commitment how they will deal with you and your estate.

Whether you want to register for our newsletter, attend one of our road shows or speak to me directly, please call or email me on the contacts below & I will be glad to help you. We do not charge for reviews, reports or recommendations we provide.

Le Tour de Finance

By Spectrum IFA
This article is published on: 20th June 2017

20.06.17

Le Tour de Finance has just finished another stage of it’s annual tour with three well attended forums in the 06 and 83 departments of the Cote d’Azur.

Due to the lovely early summer evenings, two of the sessions were held from 6.30pm culminating with a relaxed wine presentation and buffet in the lovely settings of the Mas Shabanou in Roquefort les Pins and the Bastide St.Mathieu in Grasse. The third event was held at the normal time of 10.30 in the equally lovely setting of Le Clos des Roses in Frejus.

As part of the long term commitment from the team organising Le Tour de Finance, senior representatives of large financial institutions were on hand to give brief presentations, but more importantly, were there to answer varied questions from the attendees.

Coaxed out from behind their desks, these senior executives from companies such as Tilney, Prudential, Rathbones, Momentum Pensions, SEB and Currencies Direct give short presentations on a range of subjects and then welcome questions from the floor. This really is the chance to get those all important questions answered by the professionals.

This unprecedented access to a range of international and independent experts is what sets Le Tour de Finance events apart.

After the summer recess, Le Tour will continue in October:
5th October – 13610, Le Puy Sainte Réparade
6th October – 11300, Gayda, Languedoc
17th October – 53470, Martigné sur Mayenne
18th October – 14570, Clecy
19th October – 22100, Lanvallay

If you would like further information or would like to book a place, please contact us or visit the dedicated Le Tour de Finance website for further information on the future events.

The objective of Le Tour de Finance is to provide expatriates with useful information relating to their financial lives. We try and cover frequently asked questions that we receive from our clients, however, it would be helpful for us to know what your particular areas of interest might be. If you’d like to send us your question please click here to complete the form.

UK expats cannot vote after 15 years abroad

By Victoria Lewis
This article is published on: 12th June 2017

12.06.17

This article was written in May 2015 by a lawyer friend of mine and is as relevant today.

The result of the UK election was meant to be much closer. If it had been closer, the rule which prevents British expats who have been abroad for more than 15 years from voting in Parliamentary elections may have come under renewed scrutiny.

The size of the British community abroad is estimated at 5.6 million. Most expats leave the UK for work-related reasons, taking their families with them. Mixed-nationality marriages are also a factor in emigration decisions, as well as the wish of many British pensioners to retire abroad. Thanks to exchange programs, the number of students travelling around the world to experience life abroad has increased significantly in recent years. In our ever more globalized world, borders are disappearing.

These “British Expats” are unofficial but precious ambassadors, promoting British values to their host countries. They make an invaluable contribution to the diffusion of their culture, disseminating the “British Way of Life” by projecting an image of their “Britishness” around them. In the view of the Institute for Public Policy Research, “British abroad are not a burden or an embarrassment: they are in many ways the best of the UK and we should be proud and supportive of them”.

However, their political situation is overshadowed by the fact that they lose their right to vote in the United Kingdom after they have been living abroad for more than 15 years, no matter how frequently they return to visit their home country. Exceptions exist for the military, civil servants and British Council employees, but all other British expats cannot vote under the current UK law. While most developed countries such as France, Spain, Switzerland or the USA have recognized their own expat population by giving them an unrestricted right to vote in national elections, the United Kingdom seems to be one of the few countries with this type of restrictive rule.

How the law changed
Before 1985, British citizens living outside the United Kingdom were unable to vote in UK Parliamentary elections. Following intensive pressure, the Representation of the People Act 1985 finally gave them the right to vote. They could register as “overseas voters” in the constituency where they last lived in the UK. But, 1985 also marked the beginning of a ‘time limit’ during which British expats would be able to remain on the electoral register. This period was shortened and extended, but has never been unlimited.

The Representation of the People Act 1985 made provision for British citizens residing outside the United Kingdom to remain on the electoral register in the UK for a period of 5 years. In 1989, this period was extended to 20 years. In 2000, it was decided to reduce it to 15 years, with effect from 1 April 2002, leading to the rule that applies today.

A discriminatory and arbitrary rule, according to most British expats
Due to this, pressure groups have been created to plead for the abolition of the 15-year rule. They claim that the legislation is discriminatory, arbitrary and serves no useful purpose.

They consider it to be discriminatory because not all British expats are concerned by the legislation. As indicated previously, members of the armed forces, Crown servants and employees of the British Council are exempted from the rule. Besides, in accordance with European Union Treaties, all European citizens have the right to live and work in another state of the EU. These fundamental rights should not be subject to any restrictions or penalties. They accuse the UK of acting in a discriminatory fashion by penalising the right of free movement of its citizens, whilst most other developed countries do not.

They also consider it an arbitrary treatment because the cut-off point has been fixed without a concrete objective or justified basis on which to determine who should have the right to vote. The Government used to claim that people who have lived abroad for over 15 years are likely to lose links with the UK. However, in today’s world of increasing global communication, this argument does not seem appropriate any more.

Comparison with other countries
Unlike the UK, most advanced democracies have granted their expat population an unrestricted right to vote in national elections.
In June 2012, French people abroad were able to vote for their MPs for the first time. Around the world, 11 constituencies were created. (See the article on the FBCCI Blog: Voting rights for British Expats: What can the UK learn from France?)

Spanish expats’ rights are guaranteed by article 68 of the Constitution. In Portugal, according to the Constitution, the single-chamber Assembly of the Republic is “the representative assembly of all Portuguese citizens”. Thus, expats have the same right to vote in elections for the Assembly as citizens living in Portugal. Italian expats are represented in both chambers of the parliament and elect 65 representatives to the ‘Consiglio Generale degli Italiani all’Estero’. The United States also guarantee their expat population’s political rights.

Efforts to reform
Faced with this situation, some national and European politicians have asked for the law to be reviewed or, at least, debated.

“The exercise of the freedom of movement should not result in losing an important democratic right” says Viviane Reding, European Commissioner for electoral rights, in her factsheet “Promoting your electoral rights”. “Although EU law grants EU citizens the right to participate in municipal and European elections in the Member State where they reside, it provides no such right with regard to national elections. (…) Given that EU citizens of those Member States are not able to participate in any national elections (neither in the Member State of origin not in the Member State of residence), they are deprived of one of their most important political rights just because they exercise their right to free movement. (…) The Commission will launch a discussion to identify political options to prevent EU citizens from losing their political rights when they exercise their right to free movement.”

A short debate in the House of Lords on voting arrangements for British citizens living overseas and members of the armed forces serving abroad was held on 2nd March 2011. Viscount Astor, arduous defender of the overseas voters’ electoral rights (“This 15-year rule is unfair and excludes perhaps half the expatriates living overseas. There is no credible reason for that.”), asked whether the Government would consider changing the voting arrangements that were currently in place. He called on the Government to look again at the 15-year rule. Lord Lester of Herne Hill agreed with him and has previously asked the Government to legislate to change the rules.

More recently, calls have been made for the Government to reconsider this rule. The issue was raised during the passage of the Electoral Registration and Administration Bill 2012-2013 in the House of Commons. Conservative Geoffrey Clifton-Brown proposed that a new clause should be added to the Bill to remove the 15-year limit rule: “the new clause would remove this qualifying period altogether, so that all British citizens could qualify as overseas voters, regardless of when they were last resident in the UK”.

The Parliamentary Secretary, David Health, replied that the Government would give the issue “serious consideration” but that it would not rush into a decision, “not because of any wish to obstruct, but simply because the question of extending the franchise is a fundamental one and both the Government and the House would have to feel comfortable with doing that”. The amendment was subsequently withdrawn.

The Bill received its second reading in the Lords on the 24th July 2012 and Lord Norton of Louth raised the issue of overseas voters during the debate. Lord Lexen also called for the 15-year rule to be abolished: (…) I urge strongly that the scope of the Bill be extended, as my noble friend Lord Norton of Louth argued, by adding to it provision to enable all our fellow subjects of Her Majesty who live abroad to vote in our parliamentary elections. This would end the 15-year limit rule, for which no clear rationale has ever been offered (…)”.

Lord Wallace of Saltaire responded for the Government and said there were no plans to extend the 15-year limit rule: “The Government does not have any plans at the present moment to lengthen the period from leaving the country beyond 15 years, nor do we have any really ambitious plans to do what is done in some other countries, which is to allow voting in embassies and consulates. However, the electoral period will help”.

The entrenched position of the Courts

The feeling of not being understood and being prejudiced in the execution of one of their fundamental rights has encouraged some expats to challenge the rules before the courts.

Two cases were brought recently.
The first case concerned James Preston, a British citizen living with his family in Spain and working for UK companies since 1995. In 2009 he was denied the right to vote in Parliamentary elections, having lived outside the UK for 15 years. He went to the High Court in 2011, asking for judicial review of the legislation but his case was dismissed. His application to take his case to the Court of Appeal was denied in 2012. Lord Justice Elias said he appreciated Mr. Preston and other expats were “genuinely upset about the rule”, but that there was no real evidence that “it does create a barrier of any kind to freedom of movement”. “It is inherently unlikely that the loss of the right to vote would be sufficient to cause expats to up sticks and return to the UK”, he added.

The second case was brought by Harry Shindler, a World War II veteran who retired to Italy in the early 1980’s. He took his case to the European Court of Human Rights in Strasbourg, alleging a violation of Article 3 of Protocol No. 1, which provides that: “The High Contracting Parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature”.

He claimed that no time-limit should be imposed on expats’ voting rights. He considered he should have the right to choose his place of residence without being disenfranchised. “Universal suffrage is set out in the Universal Declaration of Human Rights. Universal to my mind, and in every dictionary I’ve seen, means ‘everybody’”. “Expats abroad pay their taxes at home. There are those who have property and haven’t sold it because they believe they’ll be coming back. They pay taxes on that property. They pay council tax. The pensions we get, government and private, come from the UK and those pensions, when they reach a certain limit, are taxed in the UK. So here we have expats who pay their taxes and are not allowed to vote. It’s unacceptable.”

However, the court in Strasbourg rejected his case, ruling that the 15-year limit was “not an insubstantial period of time” and it was up to the British Government whether to choose a cut-off point. Therefore, in the court’s view, the 15-year rule does not violate the right to free elections.
In view of the positions of both the courts and the Government, it seems British expats are stuck in a situation where, after 15 years abroad, they may still pay taxes in the UK, still feel British and strongly linked to their home country, but cannot vote in British elections; nor in their host country’s national elections either.

In November 2011, the Government said Mr. Shindler is not a ‘victim’, since “it was open to him to take Italian citizenship and acquire a right to vote in elections to the Italian national parliament”.

David Burrage, an ex-soldier and policeman who co-founded the British Expats Association of Spain, commented: “When I consider that Harry had jumped ashore and onto the beaches at Anzio and offered up his life, like so many of our brave servicemen, during World War II, when viewed alongside the conduct of our Government, by way of that most recent response on their behalf, it not only makes me feel ashamed, I also feel utterly disgusted”.

Although this statement dates from 2011, it still expresses the feelings of many British expats.
Neil Robertson
Solicitor, England & Wales
Avocat au Barreau de Paris
May 2015