Once you’ve moved to Portugal, continuing to use the services of UK-based financial advisers may present challenges and result in outdated, incomplete or unsuitable advice.
Using a professional financial adviser is beneficial for managing your wealth effectively. Working together, you can establish personalised financial plans to optimise your savings, minimise taxes and ensure a smooth transfer of wealth to your heirs.
Specialist advice becomes more important when moving abroad, as you navigate foreign tax and succession regimes and consider the cross-border implications of living in one country and having heirs and assets in another.
Wishing to retain your UK adviser is understandable. Unfortunately, this presents challenges for yourself and your adviser, especially since Brexit. Advisers may need to establish regulation and licences in Portugal and could have compliance headaches as they negotiate complex cross-border tax laws, reporting requirements and multiple currencies.
Unless your UK-based adviser has arranged to meet the necessary regulatory requirements in Portugal, it may only be a matter of time before they concede they cannot support you anymore. In any case, their guidance may turn out to be unsuitable for a Portugal tax residence and result in you paying more tax than necessary.
While starting with a new adviser may seem daunting, building a relationship with one living locally in your area will soon prove advantageous.
- Regulation
For your protection and peace of mind, use a financial advisory firm which is authorised and regulated to provide advice and services in your country of residence. The EU has a ‘passporting’ system that enables firms authorised in one EU Member State to offer regulated financial services in other Member States, without additional authorisation, facilitated by harmonised financial regulations. UK-based financial advisers, firms, banks, and other financial institutions lost access to this passporting mechanism as of January 1, 2021, following the UK’s departure from the European Union.
Some UK financial groups of companies put arrangements in place to be able to continue working in an EU country post-Brexit, but many others did not due to the complexity and costs involved.
If you are using UK financial services, confirm what authorisation they have in place to advise and service EU-resident clients. Establish whether their professional indemnity insurance covers you and what their complaint procedures are for EU clients.
- Limits of UK advice and services
If you retain UK investments, a UK-based adviser may be able to continue supporting you there. But if you hold savings and investments with an EU-based institution, they may no longer accept instructions and top-ups from a UK adviser. This could limit your planning opportunities.
There may be practical challenges to keeping a UK-based adviser, such as having to travel there for meetings and paperwork. This could prove detrimental if you need funds quickly or are unable to travel through illness.
Also, as part of their product governance, product providers are no longer keen on having clients retain UK products if you have permanently moved to a European country. You may be asked to close your UK accounts.
- Advantages of local knowledge
Besides the legal and practical implications, consider whether an UK-based adviser is best placed to help you take advantage of opportunities available in Portugal.
- Do they fully understand the intricacies of the Portuguese tax regime and how it interacts with UK taxation?
- Do they have in-depth and up-to-date knowledge of the local residence, tax, succession law and reporting rules?
- Do they know about and have access to tax-efficient solutions in Portugal?
- Who will pay the bill or face the consequences if they get things wrong?
While UK-based advisers are experts on the ins and outs of the UK system, it is unlikely that they have the same in-depth knowledge for Portugal.
And of course, UK advisers who have relocated and now live and work in Portugal will have personally experienced what it is like to make the move, set up home here and navigate the local rules and regulations. They understand the frustrations and opportunities you encounter and can share a wealth of local knowledge and advice beyond financial planning.
- The suitability of UK planning
Financial planning tailored for a UK resident is unlikely to remain suitable once you’re living in Portugal. If possible, review your arrangements before you move to minimise taxation when changing residency and make the most of tax-efficient opportunities.
UK savings and investments can lose their tax benefits once you are living abroad. Meanwhile, Portugal residents have access to locally-compliant alternatives that can offer other advantages besides tax-efficiency – such as multi-currency and estate planning. Depending on your circumstances, many British expatriates in Portugal find that reviewing and adjusting how and where they hold their capital and assets improves their tax position. This applies even more with the UK tax reforms.
It has never been more important to ensure your financial affairs are compliant and suitable for your life in Portugal. Secure financial peace of mind by talking to an experienced, locally based adviser.
Keep up to date on the financial issues that may affect you on the Blevins Franks news page at www.blevinsfranks.com
