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Post Brexit trigger on 29th March 2017 – Retirement in France

This information has been prepared by Sykes Anderson Perry Limited as a general guide only and does not constitute advice on any specific matter. We strongly recommend that you seek professional advice before taking action. No liability can be accepted by us for any action taken or not taken as a result of any information or advice given or omitted.

Before Brexit people moving to France based their tax planning on becoming non UK resident when they moved permanently to France. Tax advantages for wealthier people sometimes arose as a result of becoming French resident. The uncertainty over Brexit has fundamentally changed this and people coming up for retirement and considering a move to France should now adopt a different approach, at least until things become clearer.

There is unlikely to be any residency problem for retired Britons living in France. They do not take any French jobs and remit money to France which they spend there. They also pay French tax either income tax or VAT and are taxable to French Inheritance Tax.

The two big issues are health care and pensions.

Health Care

You are entitled to full UK NHS care if you are a UK resident. When you cease to become UK resident you are only entitled to limited care e.g. a foreign tourist in the UK who is injured whilst here. You are meant to inform your GP when you move abroad and he will remove you from the NHS register. You can also not use your NHS issued European Health Insurance Card (EHIC) to access health care in the EU, though this may not apply anyway after Brexit.

The existing arrangements for healthcare in France for those below and above retirement age will probably carry on for those already in France before Brexit was triggered (29th March 2017). For those arriving after Brexit was triggered it is much more uncertain and if there is a hard Brexit there must be a very good chance entitlement will cease or be curtailed.

Pensions

The state pension is index linked if you are resident in the EU. Outside the EU you receive the state pension at the date you leave but it does not increase. There must be a substantial risk that in a hard Brexit increases will continue for people already resident when Brexit was triggered but increases will either not be given or be capped in some way for new retirees arriving.

What to do until things become clearer

The simple answer is make sure you stay UK resident. This is the opposite of what many people wanted to do in the past! It is likely to be more important for less well-off pensioners with no private health cover and who are relying on the UK state pension.

The residency test used for the above is likely to be the same as or very similar to the residency test for tax purposes. In tax planning, the UK-France Double Tax Treaty contains additional provisions (“tie breakers”) used when both countries view a person as resident in the country. This may not be relevant for Health Care and Pensions purposes which may just look at domestic UK law in deciding whether someone is UK resident.

In very broad practical terms retirees who want to stay UK resident should:

  • Keep visits to France to less than 6 months in any tax year.

  • Keep a UK home available which is not rented out.

  • Maintain UK connections and an intention to remain in the UK.

  • Do not take any steps showing an intention to remain indefinitely in France.

June 2017

David Anderson