Home » Expat Focus Financial Update December 2023

Expat Focus Financial Update December 2023

Banking for UK Expats

We have reported extensively on the closure of UK expat bank accounts post-Brexit and the situation is still ongoing. If you have been affected by your bank’s decision but still require a UK bank account, what options are available to you? A report by ‘Which’ in November 2023 unveiled several choices.

HSBC continues to offer standard current accounts to expats, and you can also bank with Lloyds through online or phone banking. However, it’s worth noting that we have spoken to Expat Focus readers who have encountered some difficulties with Lloyds International in the past. First Direct maintains regular services for existing customers but requires new clients to have a UK address.

Spanish-based bank Santander will allow you to keep your account if you already have one with them. However, they do not permit significant changes to the account, such as increasing your overdraft. Like Lloyds, new customers should opt for Santander International. Nationwide does not accept new sign-ups, but existing customers can retain their accounts. Nevertheless, there are exceptions within the EU, specifically the Netherlands and Italy, where you cannot maintain accounts with Nationwide or Virgin. Nationwide explicitly states that, as a consequence of Brexit, they can no longer serve customers in these two EU nations. If you are based in Italy, it’s worth considering HSBC, as they have offices in Milan.

Of course, you can open an account with a local bank, but as we have previously mentioned in this newsletter, many expats require a UK account and address to receive income, such as rent and pensions.

Financial Advice Against Relinquishing US Citizenship

Tax issues affecting US nationals living abroad have prompted many American expats, particularly those deeply committed to their new homes, to contemplate renouncing their US citizenship. While this may seemingly absolve you from further dealings with the IRS, financial experts are advising caution against taking such a step. Firms like Chase Buchanan Wealth Management have conveyed to the press that, in practice, Americans abroad are “rarely” subject to double taxation. Moreover, the permanent nature of the decision to relinquish citizenship, coupled with the bureaucratic hurdles involved, often does not align with actual tax scenarios.

They suggest, however, that you look carefully into your tax situation prior to relocating. Although US taxation for expats can be complex, several countries have taxation agreements with the United States or normalization agreements to address issues like retirement income. For instance, countries such as Portugal tax retirement income, meaning you pay taxes to Portuguese authorities rather than those in the USA, and these payments can be used to offset your tax liability to the IRS. Financial experts caution that the challenge lies in the expenses associated with dual filing and the intricacies of reporting your tax situation, especially if you have investments in various funds.

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Alex Ingrim, at Chase Buchanan, told the press that the US financial system: “really is a huge benefit to have [access to], where you can invest, trade and hold your money for almost nothing,” whereas many EU banks charge high fees. He advises expats to look closely at the fiscal advantages of retaining citizenship and think twice before renouncing it if you’re an American abroad. 

France: More Options for Brits

In November, the French senate threw a lifeline to British expats resident in France, giving them the option for a long stay visa which would mean that they are no longer subject to the 90-day rule. Those who voted for this change told the press that the legislation would help those British second homeowners who had been ‘punished’ by Brexit. Around 60,000 Brits have homes in France, a figure that is relatively small compared to Spain, where 1 million British expats currently reside.

Brits in Spain hold out hope that the Spanish government may follow suit, and there have been hints of this, but some feel that Brussels has too tight a legislative grip on Spain’s authorities. They report that property sales to Brits have taken a hit since Brexit and the introduction of the 90-day rule. In the meantime, it’s good news for British expats in France this winter. 

Portugal: PM’s Sudden Resignation Halts Expat Tax Plans

In Portugal the reform of expat tax legislation has been put on hold due to the Prime Minister, António Costa, stepping down over corruption charges. His shock resignation, following police raids, has – the Financial Times reports this month – put Portugal’s economy into ‘disarray.’ Tax breaks for affluent expats were on the cards up until this point, including a 10% flat tax on overseas pensions. A spokesman for Lisbon law firm Abreu Advogados told the press that there would be problems due to the cost-of-living crisis:

“If you have all these people continuing to suffer with inflation, not having any tax relief or any salary increases for at least another four, five or six months . . . ”

It is possible that the Portuguese government might still be able to push through the budget containing the new tax proposals. If President Marcelo Nuno Duarte Rebelo de Sousa choses to delay accepting the PM’s resignation and the dissolution of Parliament – but this remains to be seen.