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Brexit tax effects for expats working or investing in Europe
| Published: | 9 May at 6 PM |
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Whilst a great deal has been written about the Brexit effect on expats retiring outside the UK, the possible tax-related predicaments of those working or investing in EU member states have been largely ignored by the popular press.
The impact of a Brexit on taxation across the board could leave working and investing expats in a perilous position. In addition, UK citizens whose income originates from EU member states are likely to be much worse off due to the increased taxes imposed on investors and business owners from non-EU countries.
Britons owning a holiday let in another EU member state are certain to be hit hard by a Brexit. For example, capital gains tax on an EU citizen’s rental French gite is calculated at 19 per cent, but rises to 33.3 per cent for owners from outside the EU. Tax on income earned as a result of property lets is also likely to be much higher.
Another inescapable tax which may well be affected is VAT, although predicting any change is tricky. In the event of a Brexit, the UK government could abandon the tax, replacing it with a more expensive alternative applicable to a larger range of services and goods. Any goods sourced from the EU by expat businesses in the EU are likely to be more expensive as a result.
Social security is especially vulnerable to the effects of a Brexit, as at present wage-related contributions can only be taken in a single country at any one time. Contributions remain valid across EU member state borders, but the result of a Brexit might mean that expats working in Europe will have to pay contributions in more than one country. State pension contributions could also be lost.
Inheritance tax is another grey area, with complications due to differing rules across EU member states. EU citizens, including Britons, can at present elect to nominate either local laws or UK laws when deciding how to dispose of their assets. It’s presumed that, should the UK leave the EU, the inheritance laws in place in the deceased country of residence would apply, no matter what is stated in a last will and testament.
The impact of a Brexit on taxation across the board could leave working and investing expats in a perilous position. In addition, UK citizens whose income originates from EU member states are likely to be much worse off due to the increased taxes imposed on investors and business owners from non-EU countries.
Britons owning a holiday let in another EU member state are certain to be hit hard by a Brexit. For example, capital gains tax on an EU citizen’s rental French gite is calculated at 19 per cent, but rises to 33.3 per cent for owners from outside the EU. Tax on income earned as a result of property lets is also likely to be much higher.
Another inescapable tax which may well be affected is VAT, although predicting any change is tricky. In the event of a Brexit, the UK government could abandon the tax, replacing it with a more expensive alternative applicable to a larger range of services and goods. Any goods sourced from the EU by expat businesses in the EU are likely to be more expensive as a result.
Social security is especially vulnerable to the effects of a Brexit, as at present wage-related contributions can only be taken in a single country at any one time. Contributions remain valid across EU member state borders, but the result of a Brexit might mean that expats working in Europe will have to pay contributions in more than one country. State pension contributions could also be lost.
Inheritance tax is another grey area, with complications due to differing rules across EU member states. EU citizens, including Britons, can at present elect to nominate either local laws or UK laws when deciding how to dispose of their assets. It’s presumed that, should the UK leave the EU, the inheritance laws in place in the deceased country of residence would apply, no matter what is stated in a last will and testament.
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