Why Buyers & Sellers need to be aware of, not scared of Brexit

Unless a deal is done, on the 29th March 2019, Great Britain will unceremoniously ‘fall out’ of Europe, resulting in Britain becoming an economic 'Third Country'. What this means is truly difficult to comprehend, however preparations for this eventuality must be considered, especially for those considering living, retiring, investing or doing business abroad.

With input from several finance professionals, and by learning by undertaking research (from official sources) from being in the middle of the muddle that is Brexit, I’ve compiled a handy checklist for key considerations if the UK Government opts for a no deal Brexit.

Of course, this is purely catastrophe planning at it’s very extreme, and the chances are that some sort of deal between the EU27 and the British Government will be agreed; but the old Boy Scout motto needs to be heeded: Be Prepared!

Home Sweet Portuguese Home

One of the easiest subjects to tackle is that of home ownership.

Buying and Owning Property in Portugal is relatively straightforward, and depending on how long you expect to stay in Portugal, is only usually a matter of completing a few forms. For those looking to buy a property as a second home or holiday residence (for your own use or friends / family without deriving an income), all you’ll need is a NIF (Tax Number) and ensure your IMI (Council Tax) is paid on time, usually twice a year. This is unlikely to substantially change after Brexit.

If you’re likely to derive a formal income from your Property, you should read our guide to Alojamento Local (AL) and take official advice from a professional Property Manager. Each AL license is effectively a small business, therefore you will be subject to taxation rules in Portugal, which may be subject to change post Brexit.

If you wish to reside in Portugal after Brexit, you will need to become a Resident (or a Non-Habitual Resident). Speaking to a member of the team will help you understand your responsibilities before applying for Residency of any type.

We also should mention Wills and Testaments. At present, your Portuguese Assets would be subject to provisions made in your British Will. Following Brexit, it is recommended to have your wishes detailed in a Portuguese Will to avoid any legal issues in the event the worst should happen. Wills in Portugal must be arranged through a specialist Lawyer, although charges are much less than in the UK - at the moment!

Remaining Healthy.

The Portuguese Health Service is built to similar specifications as our own NHS, however accessing the service post Brexit is still up for discussion. Our EHIC card offers a simple point of access in case of emergency, but it won’t provide ongoing or critical illness care for those deciding to move abroad. Whilst EHIC provision will unlikely disappear, it’s not certain what services will be available post Brexit and therefore considering formal Private Health Insurance is recommended.

In any case, the current form S1 does allow you to access GP and Healthcare within the Portuguese NHS when you become a Portuguese Resident. If you’re already in Portugal, this is an important step in your healthcare provision and you should consider getting these forms completed and ratified by the SEF Department as soon as possible. It should also be noted that you’re not able to access both health systems concurrently, so ensuring you’ve got sufficient medical supplies and confirmation that any medications are available in Portugal before the forms are completed is a best practice.

Wish you were here? Make sure you’re here legally.

The good news is that those already in Portugal can easily apply for a temporary five year Residency by visiting the local town hall (Câmara). Most local authorities will turn the document around within a few hours, however some are now booking appointments due to the influx of applications and so time is of the essence. There are few questions currently for those applying for Residency, however these entry requirements (including a provision for healthcare and income to support a lifestyle) will get more demanding after March 29th 2019.

Before the end of the fifth year, you’ll be required to apply for Permanent Residency. This is where you will be required to prove how you’ll support yourself in Portugal, including demonstrating a knowledge of the language and historic identity of the country.

After six years, you are currently able to apply for Nationality: but that’s one for later and one that requires a real commitment to reside in Portugal: for ever.

The crucial part of all of this is to ensure you’re in the country legitimately: if you don’t, and Great Britain exits the EU unceremoniously, you’ll have the same rights as a tourist and therefore will be able to stay for a maximum of 90 days within Schengen and we can expect Visas to form a part of our overseas adventures too.

Brexit is Driving us crazy..

The EU Driving License is ubiquitous and an easy way to drive at home or in Portugal. Technically, as a Resident of over 183 days, an UK Driving License holder must trade-in their license for a Portuguese version. If you haven’t done so already: now may be a good time, as post Brexit, there is a fair chance that some sort of re-licensing or re-testing will be required.

There is a likelihood that International Driving Permits may be required to drive a UK Registered Car in Portugal after Brexit. In any case; the current law clearly states that a foreign registered car must only be driven for a maximum of six months before matriculation (drop us an email for more info) or removal from Portugal is required.

Tax need not be taxing: yet.

Independent Experts need to be engaged in this area before any Residency decisions are made. It’s tricky to make any forecasts or even give personal thoughts on this subject, however there are some key considerations for further investigation:

Will Double Taxation treaties continue post Brexit? If not, you’ll be liable for all Tax from your investments in Portugal as well as at home, including Capital Gains Tax from the sale of any properties abroad.
Will your Pension be payable to Portugal? If not, this may mean an increase in bank charges and delays in receiving your pension monies each month.
Will the Government remove personal tax allowances from Pensions for those who do not normally reside in the UK? Whilst this is very much a matter for The Treasury, it’s a possibility given the likely poor state of Britains’ finances post Brexit.

Don’t bank on accessing your money post Brexit

There is a gloomy prediction that UK bank accounts may be inaccessible or expensive to access post Brexit. A no-deal Brexit may lead to a loss of ‘passporting’ rights (in essence the invisible transfer of monies on a computer screen which happens in nanoseconds every time we use an ATM for example), therefore there may be a time where monies are inaccessible via Multibanco or other platforms. At the very least, a Portuguese Bank Account will be required to conduct European / Portuguese transactions post Brexit and other arrangements should be made to allow for transfers of funds from the UK.

Now is a good time to discuss options with you UK and Portuguese Bank or Regulated Currency agent.

A taste of home may cost you more.

With an estimated fifty million parcels being sent and received in the UK alone each year, everyday logistics is very much taken for granted. At this point, sending parcels intra-EU (including items purchased from your favourite online retailer) will attract additional tariffs, charges or VAT.

Whilst these additional charges may be mitigated by a future agreement, you should consider factoring-in an uplift in prices on imported goods; whether that be Typhoo Tea or a Book from Amazon.

Pulling a rabbit out of a hat for your Pet.

With the EU Pet Passport Scheme being one of almost half a million Laws and Processes to be extracted and transposed into UK Law, there are likely to be more checks and therefore more delays if you wish to travel to and from the UK with your pet or animal. Whilst there are no plans for removing pet passports, gaining a Portuguese pet passport may help you ensure a better journey for your furry friend.

Doing Business, Working and Trading.

Pre Brexit, trading across frontiers is simple. Post Brexit, there are myriad changes that are likely to be implemented; especially regarding taxation, permits to work and contractual compliance. At present, for those looking to be self employed (in almost all trades), the advice is to create a business within Portugal independent of any business activity in the UK. This ensures that both can continue to trade in their own right; however you should gain independent and professional advice before doing so.

In case of a no-deal Brexit, there may be restrictions and additional hurdles to overcome when trading across frontiers, however these won’t become totally clear until negotiations have progressed (or not).

As always, we would advise speaking to an Accountant or Wealth Planning Advisor in the UK and Portugal before committing to any decision regarding these matters.