The UK’s referendum on EU membership – implications for British citizens living in Member States

4 May 2016

As the debates around the UK’s continued participation in the European Union intensify, more attention is focusing on British citizens who are already living in another Member State. A challenge to the UK’s rule that any British citizen who has lived outside the UK for more than 15 years is ineligible to vote was recently rejected by the High Court but leave to appeal has been granted. Leaving aside this legal action, in this blog we look at the position of British citizens who have been living in another Member State – what can they expect in the event of a vote to leave the EU?

According to EUROSTAT, there are more than 2 million British citizens who are registered as resident in other EU Member States. Many of these people will be British citizens who have chosen to retire in other Member States where the weather is warmer and often the cost of living is lower. If the UK public votes to leave the EU what will be the position of these people? According to EU rules which apply to such British citizens at the moment, if they have resided in another Member State for more than five years and they over that period have had both health insurance and sufficient resources not to become a burden on the social security system of the host Member State, they will automatically have acquired permanent residence. This means that from the time when the status is acquired, the British citizen who has acquired it is no longer required to prove that he or she has health insurance and resources. This may be of substantial value as people tend to need increasing health care as they get older and, if retired, British citizens are able to use the national health system in the country where they live without obstacles and they may avoid increasingly expensive private health care insurance. However, whether such British retirees will continue to enjoy the equivalent of permanent residence in the event of a UK withdrawal from the EU cannot be assumed. It will be a matter of negotiation between the UK and the remaining EU whether such British citizens will be able to continue to enjoy the benefits of permanent residence and there may be some Member States where the cost of hosting retired British citizens could seem high.

Those British citizens who have spend less than five years living in another Member State will not yet have the protection of permanent residence. As retirees, they will need at the very least to continue to show that they have sufficient resources and health insurance to enjoy a right of residence. As the value of the British pound has plummeted already in the lead up to the referendum, those British retirees whose pensions are paid in pounds have seen a fall in income where their expenditures are made in euros. For some people on UK state pensions, the difference is important even in calculating their entitlements in their host state. Should they no longer qualify to live in the host State then a return to the UK might be the only option. The value of any property which they own in the host Member State, such as Spain, might be difficult to realise, and even if it is, itmay be rather low in comparison with housing costs in many parts of the UK.

In addition to the 2 million British citizens who are registered as living in another EU Member State, there are substantial numbers of British citizens who own property in other EU Member States and travel back and forth regularly between the UK and their second homes. The tax treatment of those second homes in the host State is a matter of increasing interest to hungry national tax authorities. Outside the EU, differential tax treatment of British citizens in comparison with nationals of EU Member States will no longer be restrained by the EU duty of non-discrimination on the basis of nationality. Further, British citizens, as foreigners entering the EU would be limited to the ‘Schengen’ three month rule which permits residence in the EU areas of only three months out of every six month period. So, British citizens would have to adopt a rather mobile life style, spending no more than three months (aggregating the days according to the number of visits in the year) out of every six months in their home in another state.

There is a tendency to take for granted the flexibility of the EU rules on moving to and from the UK and the continent, but in the event of a vote to leave the EU, British citizens living in other Member States may find things change quickly.

For example, what would be the position of a widow, let us call her Judy, who sold her home in the South East a year ago and moved to Spain? When Judy sold the family home, she gave the majority of the proceeds of the sale to her two adult children in order to help them get on the London property market. She bought a cottage in a village in Southern Spain where friends from the UK settle a number of years ago. Her main income is a widow’s pension from her husband’s former employer. Judy has now been registered as resident in Spain for 18 months. In the event of a vote to leave the EU, she will not have built up sufficient length of residence in Spain to qualify for permanent residence (which requires five years residence meeting the conditions as outlined earlier). The drop of the value of the pound against the euro has meant that her income has been diminished in Spain and while she is still getting by, she does not have any income to spare. In the event of a UK departure from the EU, she may be subject to higher income requirements to be entitled to a residence permit. For the moment, she is able to use the Spanish health system if she needs medical services as there is a generous interpretation of access to these services in Spain as regards EU nationals. There is no guarantee, however, that this position will continue for British citizens living in Spain, should the UK leave the EU. The cost of private health insurance would be prohibitive for Judy at her age. Even if she could sell her cottage in Spain, the amount of money she could recover would be insufficient for her to buy even a modest property in the UK. The position of British citizens retired in other Member States may become rather precarious if the UK leaves the EU. The option of return to the UK would in the case of someone like Judy probably mean reliance on welfare to make ends meet.

Further information

Should you have any questions or concerns about the issues raised in this blog, please contact Elspeth Guild, Katie Newbury or a member of our immigration team for advice.

You may also be interested in reading our other blogs in relation to the UK’s referendum on its EU membership.

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We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.

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