Some 1.3 million people from the UK live and work abroad in Europe, with Spain topping the list of destinations favoured by Brits abroad. But now that negotiations on Brexit are due to begin, will British expats be forced to negotiate their place as a worker in the EU?
How could Brexit affect Brits’ ability to work in member countries?
EU rules determine that employers must first prove that there are no suitable candidates in the EU/EEA (European Economic Area) in order to hire someone from outside. The European Council of Foreign Relations has suggested that, without a visa, Britons could lose their right to work in Europe.
“British workers have the right to work in member countries at the moment without prior permission, but that is likely to change when Brexit happens,” Audrey Elliott, an employment partner for Eversheds Sutherland, explains.
“We would expect special immigration arrangements to be made for British citizens who are currently working in those countries, but otherwise the right to work will be restricted in line with the local immigration requirements.”
What restrictions could be introduced for British expats who already work abroad or are looking to do so?
British expats’ ability to work in the EU will not be affected until negotiations on EU-UK relations post-Brexit are finished.
If the British government gets its own way, it will reach a reciprocal agreement with the single market, which will see British citizens with jobs in Germany, for example, given the same treatment as German citizens who work here, Eversheds Sutherlands’ Elliott explains.
Punam Birly, partner, legal services at KPMG, says one possible arrangement would be for the UK to ask the EU to grant residents of former member countries a new status, one that would allow them to enter the EU and work freely.
However, negotiating UK workers’ right to reside in EU countries will likely be a tricky one, particularly as the UK has been insistent on its target reduction in net migration.
“Given the weight UK politicians are putting behind reducing net migration it is unlikely this arrangement could be reciprocated, and therefore the EU is unlikely to consider such a proposal,” Birly adds.
But what about workers who just work a few weeks or months a year abroad?
People working abroad for short spates at a time will likely have to get used to applying for a visa to do so, says Narinder Sandher, head of immigration at immigration advisers, BR Partners.
“We could end up in a situation where some EU member states are much more relaxed and easier to visit than others. This all depends on how the countries feel and how the Brexit negotiations unfold,” she says.
“If the EU decided that the Schengen-type visa should be adopted for British citizens as well, that would be an easy route for Brits looking to travel abroad for a few months or weeks; however, EU countries are beginning to tighten their own borders because of this type of visa, so this approach is perhaps unlikely.”
How will Brexit affect workers paid in sterling living abroad and vice versa?
The value of the pound slumped after the Brexit vote and has failed to recover to levels seen prior to the EU referendum. This has already had a dramatic effect on the movement of labour between the UK and the rest of the EU, KPMG’s Birly says.
She explains that many EU workers now see the UK as a less attractive place to work and live due to the value of the British currency, while it will be more attractive for UK workers to earn an income abroad in a different currency.
The only certainty with regard to the value of sterling is that it will be volatile over the coming months as negotiations unfold, according to David Johnson, founding director at currency brokers, Halo Financial. He explained that people should plan ahead as much as possible to protect any investments or overseas transfers.
“Those bringing currency earnings back to the UK currently have the advantage and many are booking future requirements now; taking advantage of these attractive exchange rates while sterling is relatively weak,” he says.
How will Brexit impact tax for expats?
This will largely depend on where the individual resides and, of course, the negotiations agreed on between the UK and EU.
The UK has double taxation agreements with the EU, to ensure that that people do not pay tax twice on the same income, so taxation for expats shouldn’t be dramatically affected, KPMG’s Birly explains.
But Paul Davies, director at independent financial advisors, BDH Sterling, says the issue is still hazy.
“It is not clear as to whether leaving the EU will affect any double tax agreements with the existing member states.”