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BREXIT

Why the most vulnerable Brits in Germany could be hit hardest by UK bank account closures

In the wake of news that some UK banks are closing accounts for their British customers living abroad, we spoke to international money management specialist Jason Porter about the likely impact on Brits living in Germany and the rest of the EU.

Why the most vulnerable Brits in Germany could be hit hardest by UK bank account closures
Cash machines in Berlin. Photo: DPA

As the British government has failed to secure access to the EU banking scheme – known as passporting – after Brexit, UK banks are faced with complicated processes to gain financial licences with each of the EU's 27 member states.

And it seems that for some this is just not worth the effort – leading to British people living around Europe getting letters saying their accounts would be closed or their credit cards withdrawn.

It's important to stress that this is not all British banks, and not all types of account are affected. The situation is different in each country, and we don't know the full extent of what will happen yet.

But for those people who do face losing their accounts, the consequences could be serious.

READ ALSO: How post-Brexit bank changes could affect Brits in Germany

Jason Porter, a specialist in international tax and money management at BlevinsFranks Financial management, explains why.

What do Brits living in the EU need UK bank accounts for?

For many people, they just keep a UK account from habit or convenience, maybe to use as spending money when they come back to visit the UK. And for those people it is really just a bit of inconvenience to change over any direct debits to their main account in the country where they live.

But for others it could have more serious consequences if they are using their UK account for regular income – in particular for pensions to be paid into or income from UK rental property.

What's the problem with pensions?

State pensions can be paid overseas, so you can get your pension paid directly into your European account in euros, but not all private pensions have the capability to do this. It's mainly the smaller pension funds, I'd say 90 percent of private pensions can pay to overseas, but not all can so if you don't have a UK account this could be a problem.

And what about income from rental properties?

If your rent money cannot be paid into a UK account then you have two options – have the money paid into your European account and pay international transfer costs each month – these are a lot less than they used to be as everything becomes computerised, but would still add up over time. Or you could hire a UK management agent who would collect and transfer the money for you – but they will charge you a fee to do this, often 10 percent or more of your monthly rental income.

Some people just keep a UK property or properties as an investment, but for others rental income from a UK property can form the bulk of their income.

So what are your options?

Most British people living in the EU will already have a bank account in the country where they live so you need to transfer all the payments, direct debits etc that you can to this account. 

It's important to point out that this is happening quickly – account closures are likely to take place in November and some people get just a couple of weeks notice. You need to go back through your bank statements for the last few months and make a note of all payments so you can transfer them to your EU account and avoid missing payments and getting hit with charges when your UK account closes.

READ ALSO: The complete guide to opening a bank account in Germany

For those who cannot use their European account for everything there are international accounts and 'expat' accounts, but these often require a minimum deposit level. Similarly there are 'international' credit cards to replace something like a Barclaycard, but again these are often limited to high net worth accounts.

One option that could be worth exploring is Isle of Man accounts – these are sterling accounts but often operate in Europe so already have the European licences that they need.

READ ALSO: Tell us: Brits in Germany – have you been affected by the closure of a UK account?

Is this happening just because of Brexit?

Partially. The specific issue with European banking licences is because of Brexit, but many British banks had been withdrawing from Europe and selling their European operations.

If, for example, Barclays had a presence in France it would be able to carry on offering accounts to British people in Spain without needing to get extra licences, because it had an EU base that it could have passported from. But as many banks have withdrawn from the European markets they no longer have these options.

Who do you think will be the hardest-hit by this?

Unfortunately I think it will be the people who don't have a high net worth, aren't very financially savvy and maybe don't speak the language of the country they live in very well who will be impacted by this.

People with a high net worth will be able to find international accounts or expat accounts and those who are financially savvy and fluent in the local language should be able to open sterling accounts with their local banks.

Unfortunately for pensioners and those on low incomes this could be more difficult and those who are already on the margins for having sufficient resources to gain residency status in certain countries could be hard hit for, for example, having to pay extra bank charges or management fees on rental income that could bring them below the income threshold they need to gain residency status.

Jason Porter is Business Development Director of Blevins Franks Financial Management Ltd.

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BREXIT

OPINION: Pre-Brexit Brits in Europe should be given EU long-term residency

The EU has drawn up plans to make it easier for non-EU citizens to gain longterm EU residency so they can move more easily around the bloc, but Italy-based citizens' rights campaigner Clarissa Killwick says Brits who moved to the EU before Brexit are already losing out.

OPINION: Pre-Brexit Brits in Europe should be given EU long-term residency

With all the talk about the EU long-term residency permit and the proposed improvements there is no mention that UK citizens who are Withdrawal Agreement “beneficiaries” are currently being left out in the cold.

The European Commission has stated that we can hold multiple statuses including the EU long-term permit (Under a little-known EU law, third-country nationals can in theory acquire EU-wide long-term resident status if they have lived ‘legally’ in an EU country for at least five years) but in reality it is just not happening.

This effectively leaves Brits locked into their host countries while other third country nationals can enjoy some mobility rights. As yet, in Italy, it is literally a question of the computer saying no if someone tries to apply.

The lack of access to the EU long-term permit to pre-Brexit Brits is an EU-wide issue and has been flagged up to the European Commission but progress is very slow.

READ ALSO: EU government settle on rules for how non-EU citizens could move around Europe

My guess is that few UK nationals who already have permanent residency status under the Withdrawal Agreement are even aware of the extra mobility rights they could have with the EU long-term residency permit – or do not even realise they are two different things.

Perhaps there won’t be very large numbers clamouring for it but it is nothing short of discrimination not to make it accessible to British people who’ve built their lives in the EU.

They may have lost their status as EU citizens but nothing has changed concerning the contributions they make, both economically and socially.

An example of how Withdrawal Agreement Brits in Italy are losing out

My son, who has lived almost his whole life here, wanted to study in the Netherlands to improve his employment prospects.

Dutch universities grant home fees rather than international fees to holders of an EU long-term permit. The difference in fees for a Master’s, for example, is an eye-watering €18,000. He went through the application process, collecting the requisite documents, making the payments and waited many months for an appointment at the “questura”, (local immigration office).

On the day, it took some persuading before they agreed he should be able to apply but then the whole thing was stymied because the national computer system would not accept a UK national. I am in no doubt, incidentally, that had he been successful he would have had to hand in his WA  “carta di soggiorno”.

This was back in February 2022 and nothing has budged since then. In the meantime, it is a question of pay up or give up for any students in the same boat as my son. There is, in fact, a very high take up of the EU long-term permit in Italy so my son’s non-EU contemporaries do not face this barrier.

Long-term permit: The EU’s plan to make freedom of movement easier for non- EU nationals 

Completing his studies was stalled by a year until finally his Italian citizenship came through after waiting over 5 years.  I also meet working adults in Italy with the EU long-term permit who use it for work purposes, such as in Belgium and Germany, and for family reunification.  

Withdrawal agreement card should double up as EU long-term residency permit

A statement that Withdrawal Agreement beneficiaries should be able to hold multiple statuses is not that easy to find. You have to scroll quite far down the page on the European Commission’s website to find a link to an explanatory document. It has been languishing there since March 2022 but so far not proved very useful.

It has been pointed out to the Commission that the document needs to be multilingual not just in English and “branded” as an official communication from the Commission so it can be used as a stand-alone. But having an official document you can wave at the immigration authorities is going to get you nowhere if Member State governments haven’t acknowledged that WA beneficiaries can hold multiple statuses and issue clear guidance and make sure systems are modified accordingly.

I can appreciate this is no mean feat in countries where they do not usually allow multiple statuses or, even if they do, issue more than one residency card. Of course, other statuses we should be able to hold are not confined to EU long-term residency, they should include the EU Blue Card, dual nationality, family member of an EU citizen…

Personally, I do think people should be up in arms about this. The UK and EU negotiated an agreement which not only removed our freedom of movement as EU citizens, it also failed to automatically give us equal mobility rights to other third country nationals. We are now neither one thing nor the other.

It would seem the only favour the Withdrawal Agreement did us was we didn’t have to go out and come back in again! Brits who follow us, fortunate enough to get a visa, may well pip us at the post being able to apply for EU long-term residency as clearly defined non-EU citizens.

I have been bringing this issue to the attention of the embassy in Rome, FCDO and the European Commission for three years now. I hope we will see some movement soon.

Finally, there should be no dragging of heels assuming we will all take citizenship of our host countries. Actually, we shouldn’t have to, my son was fortunate, even though it took a long time. Others may not meet the requirements or wish to give up their UK citizenship in countries which do not permit dual nationality.  

Bureaucratic challenges may seem almost insurmountable but why not simply allow our Withdrawal Agreement permanent card to double up as the EU long-term residency permit.

Clarissa Killwick,

Since 2016, Clarissa has been a citizens’ rights campaigner and advocate with the pan-European group, Brexpats – Hear Our Voice.
She is co-founder and co-admin of the FB group in Italy, Beyond Brexit – UK citizens in Italy.

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