History of Brits in Spain
In 2020, it was recorded that over 360,000 UK citizens were permanent residents in Spain. An even higher number of British expats own property in Spain and spend much of the year there.
Immigration is typically driven by economic factors and the prospects of having a better life. These factors, however, are not necessarily what catalysed the mass exodus of Brits to Spain. Instead, it was propelled by the opportunity for wealthier Brits to leave their gloomy home country and live a more relaxed life under the sun. This move was popularised about sixty years ago. Flights were cheap, the British pound was strong, and the property market was thriving and garnering instant wealth for many.
This progression slowed for a time after the 2008 financial crisis. However, the number of British people in Spain has been steadily increasing for the past few decades. According to the UN Population Division, the largest community of British people living in the EU is in Spain. In fact, a recent study found that there were more than twice as many British people living in Spain than Spanish people in the UK. New developments have popped up everywhere in Spain to accommodate for the large swathes of migrants that come each year.
It is no question why Brits are moving abroad. The weather is of course appealing, and who wouldn’t want to spend their retirement on the beach? But it is also the financial benefits that draw so many Brits to Spain. The move can be a tax-efficient one. With the right financial advice, British expats can make the most out of their pensions, savings, and investments.
In recent years, though, relocating to Spain has become more difficult for British people because of the withdrawal of the UK from the European Union.
Brexit’s Impact on British Expats
Since Brexit has come into effect, British expats in Spain have become worried about their property rights, healthcare, and savings. Some have made the choice to sell their properties. Others have already left Spain and returned to the UK because of these fears.
Prior to Brexit, there were no visa requirements for those who chose to immigrate from the UK to Spain. Now that the UK is no longer a part of the EU, British nationals will need to apply as non-EU citizens. EU freedom of movement laws no longer apply to UK citizens. Therefore, those who do not apply to become a Spanish resident will need to return to Britain.
Unfortunately, some applicants will be rejected. This has been the case for some already. The Independent interviewed a man who had been living with his wife on the Costa del Sol for 5 years. They have been forced to move back to the UK because his application for residency was rejected.
In most EU countries now, Britons can only stay without a permit for a period of 90 days. It was reported that British people without Spanish resident status would be fined, banned entry, or even deported if they overstayed this period. Spain has denied these claims regarding deportation.
There are some ways around these new rules. Those with EU ancestry can apply for citizenship in certain European countries. Additionally, young British people can obtain a 12-month working holiday visa. Finally, there is also the option of the golden visa. A golden visa grants a person and their family residency for two years in Spain if they make a large investment in the Spanish economy.
Financial Services for British Expats
It is estimated that there are more than 1.3 million British immigrants in the EU. This number does not even account for those that are unregistered. Yet still, there has been no agreement between Europe and the UK with regard to the financial services sector. This has been frustrating for many individuals and businesses, as it has made them quite vulnerable to the volatility of the market.
Many UK-based financial firms have had to abandon their British clients who are living in Europe. Unfortunately, some have had their portfolios and pension funds suddenly dumped, leaving them with no time to prepare. Many of these clients are pensioners. This change has caused them to feel stressed about their living situations abroad and the potential financial burdens.
Before Brexit, many British financial advisers used a system called ‘passporting’. This allowed them to legally advise EU-based clients. This system came to an end at the beginning of 2021, leaving many expats to search for new advisers. In order to comply with the new rules, firms were given a grace period between January and July. Now, only advisory firms based in Europe can give advice to UK residents in the EU.
Of course, many clients have been left in a vulnerable position. Entrusting someone with managing your finances is a huge show of faith. This is why many people have kept their financial advisers for years, as they have built that relationship on a basis of rapport and trust. But it is complicated and costly for these companies to conduct business without the passport system. Therefore, many banks are turning away clients that have been with them for decades. This is even true for those with hefty bank accounts.
What Can You Do?
Now more than ever, choosing a qualified EU-based financial adviser is necessary in order to comply with all of the regulations. If you are a British expat in Spain and have any finance-related questions regarding this new post-Brexit world, speak with one of our Wealth Managers today.