Living With Brexit
by Thomas Marron
06 14 24 61 29
We are certainly living in interesting times, as the UK prepares to start a new chapter in its history. This has created uncertainty for British expatriates here in France and elsewhere in the EU. Many moved to France many years ago; they now consider France their permanent home and have no plans to leave.
There are many questions and theories about what will happen next, but the process of exiting the EU will take at least two years, maybe longer. The rights we have at present will be maintained for this period, and it is possible that there will not be drastic changes here after that.
The first big question for expatriates is residency. We can continue to live in France, as we have done for so many years, for at least the next two years and probably a lot longer. After the Brexit terms have been agreed we expect common sense to prevail and a new bilateral agreement set up between France and the UK to protect the rights of Britons in France and French nationals in the UK. Or there could be multilateral agreement between the UK and EU governing issues like residency rights.
British expatriates provide a significant contribution to the local economy. We buy property, pay taxes, spend money in local establishments etc. We expect the French government will want to continue to attract Britons to move to France. Likewise it will want to protect the rights of all the French people living in the UK, which would involve reciprocal agreements.
Healthcare is another concern for expatriates here (although some may also have private health cover). Although we do not know what will happen long-term, the current system should continue to apply for at least the next couple of years until the point where the UK officially leaves the EU.
Another concern is how the Brexit vote will hit us financially.
We can expect exchange rates to continue to fluctuate for a while. Ideally, the currency of your assets should match the currency of your liabilities. So if you live in France, and your living expenses are in Euros, at least some of your savings and investments should be in Euros. Speak to a financial adviser based here and discuss your aims and circumstances to determine what would be the best solution for you.
We can also expect investment assets prices to continue to fluctuate, as markets often do in times of uncertainty. It is more important than ever to have suitable asset allocation and diversification in your portfolio. Many British expatriates lean towards UK investments – corporate bonds issued by UK companies, gilts, UK shares etc. Indeed UK advisers often structure their clients’ portfolios this way but that may not always be the right balance for you.
You need to seek expert financial advice from a locally based adviser, to review your portfolio to see if you need more diversification across assets, geographical locations etc. You also want the peace of mind of knowing it is designed around your needs, aims and risk profile.
Taxation also hits our pockets; will Brexit lead to tax changes?
Brexit should have very limited consequences on how we are taxed in France. Local tax rates will generally remain the same for all residents and double tax treaties, such as the one between the UK and France, are independent of the EU, so your existing tax treatment will continue to apply.
However there are circumstances where taxation may be affected. For example, UK bonds would become non-EU bonds, and so will not qualify for the beneficial tax treatment given to EU assurance-vie and capital redemption bonds. You may wish to seek professional advice to review your position.
There may be tax rises in the UK. Although Chancellor George Osborne has now said that will be no emergency budget, prior to the vote he warned that leaving the EU would leave a “black hole” which would “require sharp and difficult tax rises” to fill. He gave examples of higher tax rates including a 22% basic rate of income tax, a 43% higher rate of income tax and a jump to 45% for inheritance tax. Speaking on the Today Show after the result, he said there could absolutely be tax rises, but the decision would come under a new Prime Minister.
In the current climate, you should build a good relationship with an established locally based financial adviser, so they keep you informed of developments that affect you and help you plan if and when you need to make changes to your wealth management.