What will Brexit mean for UK citizens in the EU and EU citizens in the UK?
Peter Macnab CA poses some important questions surrounding the impact of Brexit on UK and EU citizens, and examines what it means for CAs based in Europe.
While most attention so far has naturally focused on the business aspects of Brexit, the status of the million plus UK citizens living and working or retired within the EU, including many ICAS members, is a matter of considerable uncertainty and concern. I've reviewed some of the main issues that provoke a number of questions and comments for government response.
Currently, British nationals can continue to travel freely within the EU using a UK passport, retain their legal status as EU citizens, work and live in EU countries, receive healthcare in EU countries and can retire and collect their pensions in EU countries.
This will depend upon the deal agreed for treatment of the 3 million EU citizens living in the UK and the 1.2 million UK citizens living in the other 27 EU countries. Although Andrea Leadson and Boris Johnson made a commitment to EU citizens as part of the referendum campaign, the UK's most senior European diplomat has warned Theresa May not to guarantee the rights of EU citizens living in Britain as it was one of the few cards she can play in the Brexit negotiations. Thus, on Brexit, it will be homes, jobs, education, healthcare and future prospects that will be used as a bargaining chip between an exiting UK and its former partner EU countries.
On this basis, it would seem for the next few years, there will be worry, fear, and uncertainty for all EU expats affected - UK and others - until their fate is decided.
According to new research from the European Council on Foreign Relations (ECFR), after Brexit, the UK will have two options. One will be to join Iceland and Norway in the European Economic Area (EEA) or Switzerland in the European Free Trade Area (EFTA),if the current members agreed, but the price would be continuing to follow current EU rules on freedom of movement.
As free movement of people appears non-negotiable, the UK would lose full membership of the single market. Perhaps the Switzerland concept might then be considered best. Negotiations may then have to be conducted industry by industry, as what is good for the City is not necessarily good for the car industry. The UK may well have to negotiate separate deals with each of the 27 member states on the jobs, homes and healthcare of its citizens abroad.
In this case, the ECFR’s report believes the following main issues would have to be negotiated:
UK citizens could lose their right to work in Europe without the need for a visa, falling foul of rules in 15 member states that employers must first prove that there is no suitable candidate in the entire EU/EEA in order to hire someone from outside.
For example, would the children of long-term UK EU expats, who were born in Belgium and who return to study in the UK, be required to apply for visas to return to work in Belgium, the country of their birth and location of their family home?
EU membership allows British expats to avoid red tape on property in 16 member states. Countries such as Austria, Croatia, Denmark and Bulgaria demand that non-EU/EEA citizens have a residence permit, business registration, or permission from the government to buy there.
More than 11,000 British students now study abroad in Europe each year. As EU citizens they pay the same low fees as locals – or even study for free – in countries including Austria, Denmark, Finland, Greece and Sweden. Rates are far higher for non-EU/EEA citizens. (Our young daughter born, brought up and educated in Aberdeen and later Oxford, worked in Brussels as a stagiaire, obtained a Masters degree at a Brussels university and now is a lawyer with a French firm in Brussels. How easy will such a route be for young UK citizens after Brexit?).
British citizens would lose the right to the European Health Insurance card, which gives them immediate access to essential healthcare across the EU - free in some countries, and for a reduced price in others.
Pensioners form the majority of British expats in Europe and they can use the years they have worked in one member state to qualify for pensions in another. For example, in Germany EU citizens can count years worked elsewhere to meet the minimum requirements for a pension.
At the moment, part of the reason that UK pensioners in the rest of the EU see their pension go up every year is because the principle of the single market is applied. That means pensions and other social security payments rise wherever you live. Because this agreement is a mutual arrangement between the UK and the rest of the EU, it is likely to form part of the renegotiation process.
On the other hand, UK pensioners living in EU countries post Brexit might be treated the way they would be if they had retired to Canada, for example, where their pensions would be frozen. Thus UK citizens living and retired within the EU could lose substantial income over the years.
In a report on the effect of Brexit on expats, author Dina Pardijs said: "Long-time British expats will be unable to vote, but their lives may be radically altered. Everything will be on the table – the chance to work in Europe, to study, and keep easy access to their pensions and to essential healthcare.”
Acquiring permanent residency
Article 21 of the Treaty on the Functioning of the European Union specifies in directive 2004/38pdf (Article 16) that EU citizens can acquire the right to permanent residence in another EU country after legally residing there for a continuous period of five years.
The Westminster Home Affairs Committee in a recent report has suggested the use of various cut-off point options when EU citizens settled in the country should be given the right to permanent residence as new immigration laws come into effect.
The options recommended to the Government are:
- The day of the referendum, 23 June, or
- When article 50 is triggered or
- When the UK formally leaves the EU
However, under the present five-year rule for permanent residency, if a UK citizen, for example, has been living for only three years in an EU country when (say) article 50 is triggered, would this mean that permanent residency is allowed although that person has not been living there for the qualifying five years?
Keith Vaz, chair of the Home Affairs Committee has confirmed that "there is a clear lack of certainty in the government’s approach to the position of EU migrants resident in the UK and British citizens living in the EU. Neither should be used as pawns in a complicated chess game which has not even begun".
Acquired rights as part of permanent residence
Acquired rights are described as likely to relate to the right to residence, to work, to run a business, to own a property, the right to access public services such as health and education and the right to remain in a country after retirement.
But would all these acquired rights be maintained by the host EU country for a permanent resident who is no longer an EU citizen?
Sionaidh Douglas-Scott, professor of law at Queen Mary University of London and an expert in European law has been reported as stating: “There is no cast-iron guarantee on acquired rights in the event Britain leaves the EU. If you leave the EU you are no longer a member of the club that gives you those rights.”
Questions for the UK government:
- What exactly do the residence rights include post Brexit for EU nationals in the UK and for UK nationals in the EU that the Prime Minister reportedly hopes to secure? Will the government ensure that all the present acquired rights for those currently living in both the UK and in other EU countries will remain after Brexit? These include the right to residence, to work, to run a business, to own a property, the right to access public services such as health and education, and the right to remain in a country after retirement?
- Which is the most favoured option to be negotiated by the UK e.g. joining Iceland and Norway in the European Economic Area (EEA), or Switzerland in the European Free Trade Area (EFTA), or for the UK to negotiate separate deals with each of the 27 member states on the jobs, homes, and healthcare of its citizens abroad?
- Will the government negotiate to avoid UK citizens losing their right to work in Europe without the need for a visa?
- Will the government negotiate to avoid British students studying abroad in Europe each year to be required to pay the same fee rates as non EU/EEA citizens?
- Will British citizens lose their present right to the European Health Insurance card, which gives them immediate access to essential healthcare across the EU - for free in some countries, and for a reduced price in others?
- Will the government negotiate to ensure that after Brexit British citizens currently living in the EU and paying local health insurance will be allowed to retain their present health benefits based on past reciprocity with the UK?
- Will the government ensure that UK pensioners living in the EU do not have their UK state pensions frozen following Brexit?
- What is government's reaction to the three options proposed in the Home Affairs Committee report?
- Would the government agree that the fairest option proposed could be option three (when the UK formally leaves the EU), as it would allow those who have already spent some years settling and living in an EU country time to make up the necessary five years?
- What prospective tax changes are likely to the present arrangements between the UK and EU countries that will affect UK residents in the EU and EU residents in the UK?
Francois Hollande recently confirmed to Theresa May that there can be no access to the EU single market without allowing free movement of people, goods, capital and services. The UK will have to face tough negotiations according to EU governments. As a result, expats’ rights will no longer be guaranteed and will be subject to bilateral renegotiation.
Clearly, it is a priority for the UK government to advise its negotiating stance to UK citizens living in the EU and EU citizens living in the UK and for questions, such as those above, to be answered as far as possible in order to minimise the potential major disruption to the lives of the millions affected and permit them to plan for the potential outcome of the negotiations.
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About the author
On qualification in Glasgow, Peter Macnab spent 3 years with Price Waterhouse, Sweden, followed by 23 years with Occidental Petroleum working in Europe, London and finally Aberdeen
Thereafter he worked as a consultant for the Angolan Government and also worked in Russia, Ukraine and China among other countries on EU, IMF and World Bank funded projects
He and his wife are now retired and living in Brussels.