The expat retirement dream is not dead, but it could be more costly and complicated. Here’s what you need to do make it work.
From January 1, 2021, British citizens became third country nationals, and cannot spend no more than 90 days in any 180-day period in any country within the EU’s border-free Schengen Area.
For stays longer than 90 days, either for holidays or residency, you need to apply for a visa, said Jason Porter, director of specialist expat financial advisers Blevins Franks.
“If planning to stay for 12 months and beyond, Britons will generally require a residency permit. You can get these from the relevant consulate in the UK,” he said.
To secure a visa or residency permit in an EU country, Brits have to show they are financially independent.
The local authorities will want to make sure you have enough income to see you through retirement, and won’t end up falling back on the state.
Britons must jump through further hoops to demonstrate that they and their dependants have sufficient income and won’t be a financial burden.
Each country sets different rules on property ownership, income, financial means and medical insurance.
In France, for example, expats need to show they can at least match the local minimum wage, Porter said.
For 2021 this is €18,655, but falls to €14,667 once social insurance charges have been deducted. The French authorities will use the lower figure, which works out at around £12,550 a year at current exchange rates.
Porter said that is above today’s new basic State Pension of £9,339 a year, so expats must show they can generate income from investments and retirement savings. “A couple with two State Pensions should be okay,” he said.
Portugal also demands Brits have enough income to match its national minimum wage, currently €7,980 (£6,838 a year) for an individual and €11,970 (£10,250) for a couple.
Rules are tougher in retirement hotspot Spain, though, where single people need £23,578 a year and couples £29,473. “You must show you have general wealth, such as cash at the bank, or other savings and investments which can be readily liquidated,” Porter said.
UK citizens who move to the EU can no longer access free NHS healthcare on visits, except in emergencies.
This applies even if they are State pensioners and made National Insurance contributions for decades, because NHS access is based on residence.
You may have to buy travel insurance, which includes health cover, for visits to the UK, Porter added.
Once you have registered to live and work in an EU country, you cannot rely on the European Health Insurance Card (EHIC) or its successor, the Global Health Insurance Card (GHIC), to get local healthcare.
Expats getting a UK state pension can apply for state healthcare in their chosen country using form S1, Porter said. “This is provided by the EU state where they live but paid for by the NHS.”
You can get form S1 from the Overseas Healthcare Services. Call 0191 218 1999 or email email@example.com.
Britons who are resident abroad will have to pay tax locally rather than in the UK, and will lose tax benefits they take for granted.
Money held in Isas will no longer be free of tax overseas, nor will the 25 per cent tax-free pension lump sum.
Local capital gains tax and inheritance tax rules are also different, and in some cases may be more punitive than in the UK.