Following the latest negotiations, the UK and the EU have reached agreement on some key issues affecting expatriates.

Onward freedom of movement

In a significant move, Britain proposed more flexibility for expatriates’ freedom of movement by offering EU citizens in the UK “guaranteed rights of return”. This means those lawfully resident in Britain before Brexit would be able to leave and freely return at a later date. Previous proposals only allowed a two-year window for this right.

The ball is now in the EU27’s court to agree on reciprocal rights for Britons within the bloc. As things stand, a UK national resident in Malta, for example, would be unable to relocate to Spain from April 2019 without having to apply for visas and permits as a non-EU citizen.

Access to healthcare and pensions

Both sides confirmed they will carry on reimbursing certain healthcare costs for citizens under the EHIC (European Health Insurance Card) and S1 schemes. They also agreed to continue yearly inflation increases in State pension payments for nationals living abroad.

One area still to be resolved is the potential ‘cliff-edge’ for British personal pension and insurance payments. When current EU ‘passporting’ rights for UK financial services companies expire on Brexit day, these providers cannot legally make payments to Britons abroad. However, with both sides having a mutual financial interest in resolving this issue, it is likely to be addressed early in future negotiations.

Legal protection for citizens

A former ‘red line’ area for Britain has been how much influence the European courts should have over UK law after Brexit. The EU has maintained that EU citizens must continue to be protected by the European Court of Justice (ECJ) while living in the UK post-Brexit. Prime Minister Theresa May initially insisted that the UK would “take back control of our laws” post-Brexit and hold exclusive authority within its borders.

However, she has now offered more flexibility by signalling a future role for the ECJ in settling disputes on British soil. Crucially, she has also offered to incorporate legal protections for EU citizens into UK law to ensure Parliament cannot restrict these rights.

The divorce bill

Long an issue of contention between the two parties, the Prime Minister has now confirmed that Britain will pay its financial dues until 2020, reassuring the EU27 that they will not have to pay more or receive less as a result of the UK’s exit.

However, the actual figure required to meet these promises is unclear. So far, she has only agreed to pay a divorce bill of around €20 billion up to 2020, falling short of the estimated €50-€100 billion payment expected by the EU.

Delaying full Brexit

In her speech in Florence in September, the Prime Minister requested a two-year transition period for Britain’s exit. She pledged that Britain would continue to follow EU rules until 2021 – including freedom of movement and paying into EU coffers – in return for uninterrupted access to the single market.

The transition period is expected to be considered in the EU summit later this month, where the EU27 will discuss whether ‘sufficient progress’ has been made to move negotiations beyond specifically divorce-related issues.

What happens next?

Britain’s proposals have been welcomed as “a step forward” by EU chief Brexit negotiator Michel Barnier. However, he suggested “it will take weeks, or maybe even months” before they can move onto the next phase of negotiation topics, including trade arrangements.

Britain has now made concessions in three key areas – accepting free movement of EU citizens, paying its share of EU bills and maintaining the legal authority of the ECJ – which is widely seen as a positive step towards securing mutual agreement. Although there is still a long way to go, Britons living in Malta can find reassurances here, especially regarding healthcare and State pension payments.

Amid so much future uncertainty, however, it is important to understand how you could be affected and be as prepared as you can possibly be. A locally-based financial adviser who understands the interaction between both the UK and Malta tax systems can help keep one up-to-date with Brexit developments and find the best solutions tailored for expatriates.

www.blevinsfranks.com

Kevin Cassar is regional manager, Blevins Franks.