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Brexit is coming, but no direct actions required for expats

Current regulations are still effective after January 31st 2020

 

On June 23rd 2016, a small majority of the electors of the UK voted to leave the EU. Now, after more than 3.5 years of discussion, Brexit is the closest it has ever been.

Recent and upcoming developments

When the previous Brexit deadline of October 31, 2019 was not met, the EU agreed to extend the Brexit date to January 31, 2020. The whole process was put on the fast track after Boris Johnson won the British elections with a majority in the beginning of December, 2019. This made Boris Johnson’s Brexit Law, containing the Brexit-deal, easily pass the House of Commons on January 9, 2020.

The Brexit-deal will still need to pass the House of Lords, but this will likely be a formality. Then, finally, the European Parliament will have to provide their approval on January 29 or January 30, 2020. Without the Brexit-deal being approved by the European Parliament, there is still a small risk on a no-deal Brexit on January 31, 2020.

After January 31, 2020 starts transition period

Provided that there is a deal, a transition period will start on the same day of Brexit. During this period, all the European regulations will still be applicable. This transition period will be valid until December 31, 2020, regardless whether there is a deal or not on that date. If both the UK and the EU agree, the transition period can be extended once for two years until December 31, 2022. This decision needs to be made before July 1, 2020. This will be an important deadline, since the British Prime Minister Boris Johnson said he will not allow any extensions to the Brexit transition period, while criticasters do not believe that such a comprehensive trade deal can be secured on such a short notice.

As a result, there is a chance that the transitional period ends on December 31, 2020, without there being a deal with the European Union.

What are the consequences after January 31, 2020?

During the transition period, the UK and EU will start negotiating the details, while as mentioned, the European regulations will still be applicable. Therefore, there will not be so many consequences. Even though there will not change much, multiple multinationals intend to move out of Britain because of the uncertainty of the Brexit. The expectation is that the UK wants to tempt international companies to settle or remain in the UK by offering some tax benefits. 

Consequences of Brexit for British expats in the Netherlands & Dutch expats in the UK

Since the negotiation of the details will start after January 31st 2020, there will be no direct tax or migration consequences. The current regulations are still effective. If you have been living less than 5 years in the UK after the transition period, you can lose your residence permit if you are not working. This is the current situation and will not change after Brexit. In the upcoming months of negotiations, it will become clear what the impact is going to be after December 31st 2020.

In case of a no-deal Brexit, the Dutch government will provide a 15 month transition period. For instance, the British citizens who lawfully reside in the Netherlands retain their rights to stay, study and work in the Netherlands. This also applies to family members of British citizens who are not EU nationals themselves. In case of a no-deal Brexit, the UK published several policy papers and no-deal notices. The UK will be responsible for the correct execution.

Social security

For both British expats in the Netherlands and Dutch expats in the UK, there will be no impact on the social security situation, regardless whether there will be a deal or no-deal Brexit. The Netherlands has made special arrangements to mitigate the adverse effects of a no-deal Brexit on current pensions and benefits, and A1-certificates. Due to these special arrangements, the negative consequences of a no-deal will be limited for the first year after Brexit from a Dutch point of view.

Provided that there is a deal on January 31, 2020, we can conclude that the real impact of Brexit will not immediately become clear on that date. In fact, there will not change much and no direct actions are required. The upcoming months of negotiations and the decision of the UK to extend the transition period before July 1st 2020, will be more interesting.

Saskia Hemmes-van der Kruk

HBK fiscalisten_expat consultants

HBK fiscalisten_expat consultants

mr. Saskia Hemmes-van der Kruk

071 5422720

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