How should people prepare for moving to the EU to start a business?
Starting a business in another country can be daunting. From a financial planner’s perspective, there are three areas that you need to prepare for in advance;
- Tax Planning – Where will I be paying tax on the personal and corporate income?
- Financial Planning – How will the move affect my personal situation?
- Estate Planning – I’m going to become tax resident (where I pay my tax) in another country however my domicile (where is my legal residence / permanent home) may still be in the UK. If I die what will happen to my estate?
What timescale should they give themselves?
Moving to another country needs careful planning and this should be started well in advance of your departure date. You need to give yourself at least 12 months to ensure you have enough time to organise your financial, tax and estate planning.
What do people need to be aware of when they are moving to another country in Europe?
If you will be starting a business in the EU, you will need to understand the tax regime of the country you select. Some countries may be more favourable than others and could even offer tax incentives for you to come to their country. One thing that most people will have in common that leave the UK is ambiguity on how the assets they leave behind are taxed. Therefore, it is essential that specialist advice is taken so you can understand the implication and make a plan to mitigate potential tax issues.
How should people go about contingency planning?
In case your new business venture doesn’t go to plan it’s important that you have flexibility built into your financial planning. Just because you will be spending Euros doesn’t mean you have to exchange all your liquid assets into another currency. Moving to another country can also be tough on marriages. Give yourself time to adapt to your new environment before making any significant changes to your financial situation
How does Brexit impact all these considerations? What additional factors such as exchange rate falls should now be taken into account?
On the whole Brexit has had a positive influence on the UK markets. The pound is much lower now compared to before Brexit therefore foreign investors and businesses can purchase goods / services more cost effectively than they could before Brexit. That said, for those looking to leave the UK and set up a business in Europe, the cost will be noticeably more. The UK still hasn’t left the EU and the continual exit negotiations are having a regular effect on the value of the Pound. I’m sure there will be further volatility in the value of Sterling therefore it’s important to take advice from a currency specialist ideally one who is Financial Conduct Authority regulated.
How will Brexit change the financial circumstances for Brits moving to Europe?
Foreign citizen rights are a hot Brexit topic. Rights to healthcare, benefits and state pension income accrual rates are a number of subjects that are currently under negotiation with the EU. What the final outcome of Brexit will be is still an unknown therefore it’s important that you retain flexibility in your plans so that if the unexpected arises, you have the ability to deal with it.
How should they negotiate the different financial systems (healthcare, insurance requirements etc) in their new country of residence?
On the whole it’s important to take advice from professionals who can guide you in the local financial systems. Much of this can be done before you leave the UK. It’s crucial for your own protection that you only deal with advisers who are authorised and regulated in an appropriate manner. Many expat Brits have taken financial advice on their UK investments and pensions from local financial advisers who are not regulated in the UK to offer financial advice. They often are sold expensive commission based investment and pensions where the true cost isn’t disclosed. Also, when things go wrong there is no financial ombudsman there to protect the client should their local unregulated financial adviser be unable to resolve their complaint fairly.