As we drift between a soft and hard Brexit, it is important to also consider the impact of legal residency – the right to live in an EU state - on those UK nationals who visit their holiday home regularly, and those who decide to permanently move.
At the current time, UK nationals can pretty much come and go as they please. Freedom of Movement has given rise to two communities of non-working UK nationals in the EU – those who live their permanently, and those who spend some of the year there (though making sure it is less than 183 days to remain non-resident from a tax perspective).
Strictly, once you know you will exceed 90 days you are supposed to apply for a residency permit, but Freedom of Movement has meant little attention has been paid to this rule, and some countries do not actually have any registration requirement (eg., France).
At the current time a hard Brexit would mean a cliff-edge legal residency situation for those UK nationals who spend more than 90 days a year in the EU. They would be restricted to three months in any six month period, before having to obtain a residency permit.
Existing long-term residents are already wise to the situation, with thousands now in the process of applying for residency permits to regularise their situation.
In addition, those applying now who have moved under Freedom of Movement can apply at their leisure. If the UK becomes a “third state” then any application must be made at the relevant consulate in their home country before the first three months are exceeded.
A soft Brexit should include transitional rules with more flexible requirements and application period, but residency permit rules are likely to become stricter once the UK fully exits the EU. This will become only more immediate if the EU maintains its insistence on the transitional period ending on 31 December 2020.
The Theresa May agreement laid down a minimum income requirement for legal residency which maintained current EU regulation limits of either the state’s unemployment benefit or state pension. Generally, third state requirements can be as high as the states equivalent annual minimum wage – something many UK nationals might find it difficult to satisfy when they are in retirement.
The EU’s Brexit contingency plan requests the EU27 "adopt a pragmatic approach to granting temporary residence status", and encourages EU states to be generous in their approach towards the rights of UK citizens in the EU. But, this generosity vanishes if the if the UK does not reciprocate with its own legislation.
Jason Porter is a Director with Blevins Franks Financial Management Limited. Blevins Franks provides international tax and wealth management advice to UK expatriates through 22 offices in France, Spain, Portugal Cyprus, Malta and the UK.