The Brexit plot has definitely thickened over the last month, with the Daily Express claiming, in late September, that war has erupted between the UK and the EU. The UK’s negotiating team says that the EU has “politicised” the negotiations and “overreached” itself in the banning of food exports to Europe. In addition, there have been accusations that the EU has been trying to stop Liam Fox, the UK former international trade secretary, from taking on a role at the World Trade Organisation (WTO).
As if Boris Johnson didn’t already have enough to worry about, there has also been a major row about the Internal Market Bill. German MEP David McAllister has said that the recent disputes have “damaged” confidence in Britain (assuming there is any confidence left). He also suggested, earlier in the month, that unless the IMB was withdrawn, any trade deal could be derailed.
So, Brexit seems to be having all kinds of knock-on effects, and there is less hope that any firm arrangement can now be negotiated in time. But what does this mean for you, as a British resident of an EU nation?
The big concern among expats this month is the approach taken by some British banks to UK residents overseas. We’ve reported on this elsewhere, but it bears repeating: if you are a British expat in the EU, or an EU national currently resident in Britain, you should contact your bank, if you have not heard from them already, regarding the status of your account. The failure of the government to arrange post-Brexit rules has made UK-based banks jittery, to the extent that Barclays and Lloyds have announced that they will close bank accounts belonging to UK citizens in Europe, unless those citizens also have a residential address in Britain. They will also be asking you to cut up your credit cards – although you will still need to pay off your remaining credit balance.
Lloyds are cancelling accounts in Holland, Slovakia, Germany, Ireland, Italy and Portugal, and may do so in other countries, from the end of December. Barclays are cancelling accounts even earlier, from late October to November 2020. They say that “the timings for account closure will depend on the type of product that a customer holds.”
Coutts are also ceasing to serve British clients abroad, if they don’t have a UK address. This has resulted in some clients giving the British addresses of relatives or friends. Some of these accounts hold considerable sums of money, resulting in potentially serious difficulties for clients.
EU nationals in the UK must also contact their banks, as the situation cuts both ways. One Dutch contact of Expat Focus says that her Dutch bank intends to keep expat accounts going for residents in the EU. However, each bank is taking a different approach. Santander, for example, has said that it has no plans to cut British nationals’ bank accounts, and Nat West has taken a similar approach. Other banks have not yet declared their position – so you need to keep abreast of the situation.
Basically, this is all because the system known as “passporting” has not been set in place. Without it, British banks are not licensed to operate clients’ accounts in Europe and are therefore technically breaking the law if they do so. In order to continue to operate, they will need to apply for new licences in each of the EU nation states. This is not only a bureaucratic nightmare, but also expensive. It is cheaper for banks simply to cancel existing accounts. A spokesperson for one major bank has said:
“In some cases, continuing to serve customers would be incredibly complex, extremely expensive and very time-consuming, and simply would not make economic sense. This is passporting — this is the reality of Brexit.”
That a bank such as Coutts, which has some of the wealthiest customers in the UK banking system, is taking this approach can be seen as indicative of the scale of the problem.
One Expat Focus contact has, however, told us that Barclays have informed her that her account will be staying open “for now.” They may be revising their policy as a result of adverse publicity in the UK national press. What happens to your account may also depend on the kind of product that you have.
You should also be aware that if you are resident in Spain and have had to stay there longer than you intended, due to the lockdown, then your tax status might be affected. The Spanish government has chosen to go against OECD advice and will charge tax to residents who stay over the 183-day annual limit. This won’t affect Spanish nationals in the UK, however, as Britain is conforming to OECD guidelines. Spain might not be the only nation charging tax as a result of the pandemic, so check the governmental policy of your host nation.
More broadly, do you need to start worrying about a no-deal Brexit? Unfortunately, the short answer is “yes.” James Green, the divisional manager of deVere Group, has told the press that:
“This saga is making Britons living across Europe increasingly financially fearful – and rightly so – as they could be disproportionately affected by the UK crashing out of the EU. There are major concerns that existing payments from UK organisations to those living within the European Economic Area (EEA) could be disrupted or even made impossible. As such, in the event of a no-deal Brexit, many UK expats could find that their pensions, insurance and healthcare provision could be adversely affected.”
Moreover, he warns that expats could be adversely affected by a falling pound. Their purchasing power has been decreasing since 2016 and is likely to drop further. 36% of deVere clients have been endeavouring to Brexit-proof their finances, and all British expats in the EU are advised to try to do the same.
As always, keep an eye on the situation, and be aware of the rapid changes that are continuing to take place as the Brexit saga unfolds.