Reassuringly, even if there is a no-deal Brexit, citizens’ rights for UK nationals legally settled in Malta by December 31, 2020, are protected under the UK-EU Withdrawal Agreement. However, there are no guarantees for financial services, which could affect whether you can continue to receive UK-based advice and services as an EU resident.

With no certainty that negotiations will be resolved on time, make sure you check that your financial planning – and adviser – will stand up to the challenges that Brexit may bring. Here are four key considerations.

The end of passporting

Under today’s rules, UK-based financial businesses can ‘passport’ out of the UK and into Europe – but this will no longer apply after December 31, 2020. ‘Passporting’ is currently possible because the UK Financial Conduct Authority (FCA) is bound by the same rules and standards as other financial regulators in the EU.

But once the UK leaves the EU, the regulation of financial activity and consumer protection may not continue to line up on both sides.

Unless a mutual deal is agreed in time, the EU will stop all passporting arrangements for UK businesses from January 1, 2021.

Some UK financial firms have put provisions in place to continue working in an EU/EEA country post-Brexit, but others have not.

We have already seen letters from major UK banks advising EU-based clients they will be withdrawing services and recommending they make alternative arrangements now. 

So, if you wish to continue using a UK-based financial adviser/provider while living in Malta, make sure you check they can legally advise you after the transition period.

The limits of UK advice

If you hold savings and investments with an EU-based institution, from 2021 they may not accept instructions, such as top-ups, from a UK adviser.

The financial regulator in France, for example, has already confirmed it will be illegal for French banks and insurance firms to do business with a provider who is not authorised in the country.

We can expect similar positions to be taken by other EU regulators, which could clearly limit your planning opportunities.

Also check if there will be practical challenges to keeping a UK-based adviser, such as having to return to the UK for meetings and paperwork requirements. How this would work if you need funds quickly or are unable to travel through illness or sudden travel restrictions?

The advantages of local knowledge

As well as the legal and practical implications, you should also review whether an adviser based in a different country is best placed to help you take advantage of opportunities available in Malta. Will they fully understand the intricacies of the Maltese tax regime and how it interacts with UK taxation?

Will they have in-depth knowledge of local residence, domicile, tax, succession law and reporting rules? Do they know about – and have access to – tax-efficient solutions that offer significant benefits to Malta residents? Who will foot the bill or face the consequences if they get things wrong?

While UK-based advisers may be experts on the ins and outs of the UK system for residents there, it is unlikely that they have the same in-depth knowledge for another country.

The suitability of UK planning

Remember: financial planning tailored for a UK resident is unlikely to remain suitable once you become resident elsewhere. If you are holding on to UK savings and investments, beware that they can lose their tax benefits once you are living abroad. Furthermore, once they cease to be EU/EEA assets from 2021, they could potentially attract a higher tax bill, in either or even both countries.

Meanwhile, Malta residents have access to locally-compliant alternatives that can offer other advantages besides tax-efficiency – such as multi-currency and estate planning flexibility – so explore your options.

As full Brexit draws nearer, it has never been more important to ensure your financial affairs are both compliant and suitable for your life in Malta.

Secure financial peace of mind by talking to an experienced, locally-based adviser, as soon as possible before the 2020 Brexit deadline.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon Blevins Franks’ understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.  Keep up to date on the financial issues that may affect you on the Blevins Franks news page at www.blevinsfranks.com.

Kevin Cassar, Regional manager at Blevins Franks