UK triggers Brexit: What now for British expats and businesses in Belgium?

"For a long time you will see almost no changes"
Jonathan Watson, chief market analyst, Foreign Currency Direct

With Article 50 to be triggered on Wednesday, we still have two years of negotiations to look forward to, where many questions which have been on the tip of most expats' tongues will be answered.

We have already a few clues as to where the direction of the negotiations will be taking us. This clarification has finally come from the European side of the upcoming debate. After months of posturing from European leaders, a more coherent idea of their goals heading into the debate emerged just last week.

Michel Barnier, the EU’s head negotiator for Brexit over the next couple of years, had a few choice words to say to the European Council. Firstly negotiations could be longer than initially anticipated – both sides say it is likely that a temporary agreement will be put in place to cover negotiations beyond the two-year time allocation. So for a long time, you will see almost no large changes to the lives of expats overseas - apart from daily currency market movements.

Secondly, Barnier seems as keen as the House of Lords to immediately guarantee the rights of British expats in the EU, alongside EU citizens in the UK. He says this will be a priority to be dealt with almost immediately, and this is why Theresa May did not want the rights of EU citizens guaranteed in the Brexit Bill - she wanted to trade it off for a similar guarantee. Music to the ears of expats overseas.

Thirdly, Barnier is keen for a deal. Dutch officials have been stating a similar model to the Canadian-EU relations to be employed for the UK. He even gave the European Council what could quite comfortably be termed a ‘telling off’ by stating that even some people in the UK are not hoping for a deal, so attempting to deprive the UK of one would simply be playing into those hands. Constructive words where this debate has had an absence of those for some time.

So what else can we expect then for the rest of the year? As stated, negotiations will be ongoing, and a deal will have to be ratified on both sides of the Channel and by all member states before it becomes law. So, legally speaking, expect the ‘keep calm and carry on’ mentality to remain in place.

From a currency perspective however, that is a different story. The value of the pound against the euro continues to fluctuate with the ins and outs of Brexit, and with Wednesday bringing a day which markets have been waiting for, some with eagerness and some with anticipation, it is unlikely to be a quiet day.

Some highlight how far the pound fell in the first stage of the Brexit confirmation – the referendum – and this suggests further falls to come once the next step on the ladder is reached. Others point to a much clearer base of parliamentary support, constructive tones from the eurozone, and a still steadfast British economy backing the move to just get on with it at this point and provide some more certainty moving forward.

Unfortunately, gauging the psychology of how global markets will react to the news is not easy, but the outlook now looks rosier for the negotiations.

Further down the line, we have the upcoming French and German elections to take some of the spotlight away from the UK, just as the Dutch election has. So expats abroad could once more be seeing an improvement as far as pounds may go towards a property purchase and living expenses abroad.

"What's going to happen to my pension after Brexit?"
Ed Read Cutting, director, The Fry Group Belgium

I was asked the above question at the Gare du Midi when introduced to someone by my travelling companion as an "adviser on expat pensions". My first answer was the obvious rhetorical "who knows?" quickly followed up by a nonchalant "probably not much", on the premise that any entitlement to state pension cannot be taken away and any taxation on pensions is between countries, rather than legislated by the EU.

My inquisitor had four years of pension contributions in Portugal, four in Luxembourg and eight in the UK. Suddenly I could see a potential problem (and I stress potential) in that many EU countries now have a minimum 10-year rule (15 years in Portugal), meaning that you must have at least 10 years of contributions in that country before you can claim a state pension. However, they cannot discount time spent contributing in other EU countries.

With Portugal, Luxembourg and the UK in Europe, this person has over the requisite 10 (and 15) years of contribution and therefore entitlement to 16 years of pension, albeit in three different countries. However, without the UK he only has eight years in EU countries and potentially loses those accrued pension rights.

To compound issues the UK is one of the countries that uses the 10-year rule. Therefore, he’ll potentially lose his eight years in the UK as well. This will apply to all those who have been posted to the UK with fewer than 10 years of contributions and then move back to Belgium (or any other EU country - and this could be a significant loss of up to 25% of state-pension entitlement.

But what about other UK pension rights? I think it is genuinely too early to tell. I see a lot of scaremongering by non-Belgium-based advisers on the use of QROPS (Qualifying Recognised Overseas Pensions Schemes). These schemes are recommended as a suitable vehicle for the transfer of UK company (and some personal) pension rights - and their advertising uses Brexit to legitimise this course of action.

This is not only expensive but possibly inappropriate advice for those who have no idea where they might be tax resident. For the most part lower-cost alternative transfer options are available depending, of course, on each individual’s situation. Scrutiny of the recently revised double taxation treaty between the UK and Belgium will tell you that a UK pension will be taxed in the UK and therefore can be used against personal allowances. A QROPS will be treated as income in Belgium, thus hitting higher rates of tax earlier.

What business needs from Brexit deal: negotiation priorities
The British Chamber of Commerce in Belgium

The UK's departure from the EU is a matter of great importance to the British Chamber of Commerce in Belgium and its members. The British Chamber of Commerce in Belgium wants the best possible agreement between the UK and the EU, which recognises the highly interconnected nature of our economies and provides the clarity, certainty, and practicability that is needed to prevent unnecessary damage to our members, the wider business community and the UK and EU economies.

Agreeing on a new relationship that will enable a seamless business environment between the UK-EU will be very complex, particularly given the limited amount of time available for negotiation once Article 50 is triggered. To guide this discussion the British Chamber has established a set of 10 guiding priorities, which we believe must underpin the future agreement.

In light of the complexity and time-sensitivity of the negotiations, we believe that the two parties should agree as soon as possible on transitional arrangements that allow the status quo (as regards rights of residents, trade in goods and services, free movement of capital and financing of the real economy) to remain unhindered until a satisfactory and comprehensive agreement on the new EU-UK relationship is reached.

• Foreign Currency Direct plc is authorised by the Financial Conduct Authority under the Payment Service Regulations 2009 [FRN 538392] for the provision of payment services.
• The Fry Group (Belgium) SA provide advice on Pensions, Retirement Planning and Wealth Management and are regulated by the FSMA (23345 A-B). This article is based on our current understanding of the law and is not to be taken as a suitable alternative for individual advice.