As we move towards the end of 2021,Brexit is no longer a novelty, but we are still learning exactly how we are or may be affected. While in many ways day-to-day life hasn’t changed for British expatriates, there are some inconveniences – some minor, some not so minor.
One Brexit consequence that is causing concern and difficulties for many UK nationals in France, is financial advice and services – we are receiving a lot of questions about it.
The Brexit trade deal did not cover financial services, which meant the previous ‘passporting’ regime came to an end on 31 December 2020. While post-Brexit negotiations could change things in the future, you do need to establish if your financial planning – and adviser – will stand up to the challenges that Brexit brings today. Here are four key considerations.
1. The end of passporting
If you have a good relationship with your UK-based financial adviser, you may understandably wish to continue using them, despite now living in a different country. However, you need to make sure they can legally continue to advise you now that the UK is no longer an EU member state.
Until the end of 2020, UK-based financial businesses could ‘passport’ out of the UK and into Europe – but since 1 January 2021, this no longer applies.
‘Passporting’ enables cross-border transactions between EU member states through shared financial regulation. It was previously possible because the UK Financial Conduct Authority (FCA) was bound by the same rules and standards as other regulators in the EU. Now the UK has left the EU, the regulation of financial activity and consumer protection no longer lines up on both sides. So, unless a mutual deal is agreed on financial services in future, the EU no longer permits ongoing passporting arrangements for UK financial businesses and advisers.
Some UK financial firms have put arrangements in place to be able to continue working in an EU country post-Brexit, but others have not. Many expatriates with EU residential addresses have received letters from UK banks, financial advisers and investment institutions advising that they can no longer support them.
2. The limits of UK advice
If you still retain UK investments, a UK-based adviser may be able to continue supporting you there. But if you hold savings and investments with an EU-based institution, they may no longer accept instructions, such as top-ups, from a UK adviser. The financial regulator in France, for example, had confirmed it would be illegal for French banks and insurance firms to do business with a provider who is not authorised in the country post-Brexit. Similarly, while the Central Bank of Ireland enabled a three-year grace period for servicing existing insurance contracts, it will not allow unregulated entities to renew or create new policies from 2021.
We can expect similar positions to be taken by other EU regulators seeking to protect consumers in their country, so this could limit the planning opportunities for expatriates using UK-based advisers.
Also, check if there are any practical challenges to keeping a UK-based adviser. Do you have to travel to the UK for meetings and paperwork requirements? Consider how this would work in situations where you need funds quickly or are unable to travel through illness or travel restrictions.
3. The advantages of local knowledge
As well as the legal and practical implications, consider whether an adviser based in a different country is best placed to help you take advantage of opportunities available to you in France. For example:
· Do they fully understand the intricacies of the French tax regime and how it interacts with UK taxation?
· Do they have in-depth knowledge of the French residence, domicile, tax, succession law and reporting rules?
· Do they know about – and have access to – tax-efficient solutions that offer significant benefits to France residents?
· Who will pay the bill or face the consequences if they get things wrong?
While UK-based advisers may be experts on the ins and outs of the UK system for residents there, it is unlikely that they have the same in-depth knowledge for another country.
4. The suitability of UK planning
Remember: financial planning that is tailored for a UK resident is unlikely to remain suitable once you become resident elsewhere. If you have not yet moved to France, review your arrangements before you do to minimise taxation when changing residency and make the most of tax-efficient opportunities in France.
If you are holding on to UK savings and investments, beware that they can lose their tax benefits once you are living abroad. And once they cease to be EU/EEA assets and you are no longer a UK resident, they could potentially attract a higher tax bill, in either or even both countries.
Meanwhile, France residents have access to locally-compliant alternatives that can offer other advantages besides tax-efficiency – such as multi-currency and estate planning flexibility – so explore your options. Depending on your circumstances, many British expatriates in France have found that reviewing and adjusting how and where they hold their capital has significantly improved their tax position.
It has never been more important to ensure your financial affairs are both compliant and suitable for your life in France. Secure financial peace of mind by talking to an experienced, locally-based adviser.
Blevins Franks Group is represented in France by the following companies: Blevins Franks Wealth Management Limited (BFWML) and Blevins Franks France SASU (BFF). BFWML is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists. Blevins Franks France SASU (BFF), is registered with ORIAS, registered number 07 027 475, and authorised as ‘Conseil en Investissements Financiers’ and ‘Courtiers d’Assurance’ Category B (register can be consulted on www.orias.fr). Member of ANACOFI-CIF. BFF’s registered office: 1 rue Pablo Neruda, 33140 Villenave d’Ornon – RCS BX 498 800 465 APE 6622Z. Garantie Financière et Assurance de Responsabilité Civile Professionnelle conformes aux articles L 541-3 du Code Monétaire et Financier and L512-6 and 512-7 du Code des Assurances (assureur MMA). Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of retirement schemes. This promotion has been approved and issued by BFWML.
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