How does Brexit affect Expats' Tax?
ProACT Sam discusses how UK Expat’s tax is affected by Brexit. Double Taxation Treaties are not impacted, however, there are likely to be changes moving forwards, with some positive impacts and some negative impacts.
Double Taxation Treaties will NOT be affected by Brexit
Any existing taxation arrangements Expats have got for Property Rental Income, pensions, business or earning across-border, within the EU, will NOT be impacted by Brexit. Double Taxation Treaties are international treaties and do not therefore fall under the EU remit.
Potential Changes to Taxation as a Result of Brexit
There are some areas which will change and some regulations which may change. We do not yet fully know the extent of these changes as this is something which will be discussed during the Brexit Transition Period, which ends at the end of 2020.
Duty Free purchases may return to the UK
For those who remember bringing their ‘Duty Free’ back from France or other EU countries, one of the positive impacts of Brexit on the UK is that you may see this return. So for those Expats travelling on holiday or for short business trips between the UK and the EU, what we might find is that Duty Free travel comes back too.
The EU is a free-trade zone and there’s currently no restriction on the amount we can bring from one country to another within the boundaries of the EU, however, you are paying VAT on those items. VAT is an EU ‘duty’ or ‘tax’.
If Duty Free allowances and VAT rebates returned, this should allow more wine to be brought back from Italy, Spain or France for UK Expats (or whiskey to be brought into Cyprus!). Duty Free is a small, minor benefit that is likely to come about post-Brexit.
Trade Deals Post-Brexit Leading to Trade Tariffs
A lot of the noise concerning Brexit relates to trade deals and this involves business and trade tariffs being introduced on UK goods and services.
In the same way as anyone knows who has imported or bought something online from China or the US, when those goods have been delivered from outside the EU, the recipient has to pay a small amount of money charged as a ‘tariff’, or a ‘custom duty’. That is because you are importing from outside the EU.
This is potentially where the UK could find itself, so all UK goods going into Cyprus (or other EU country) could incur these small tariffs / charges. The level at which these tariffs would be applied and to which products, will form part of a ‘trade deal’ to be negotiated during the Brexit Transition Period.
This is an important issue and it will mean a few changes. For businesses, for example, it might mean new regulations and new customs forms. For online shoppers it means potential tariffs being applied to purchases. However, for income tax and investment taxes for those Living and Working Abroad, it should largely remain the same.
Download our FREE Brexit Checklist for Expats
To keep in touch with the changes that will come into play during the Transition Period, ProACT Partnership has created a checklist for Expats to monitor. This provides a list of the 10 things Expats should follow during the Transition Period.
Subscribe to our news letter and we’ll send you the Brexit Checklist for FREE.
ProACT Know How
To stay up to date with news and developments during the Transition Period, follow ProACT Partnership’s blogs and vlogs. And to always keep up to date on the latest developments for those Living and Working Abroad, join us on Facebook.
