Expatriates: Impacts of a hard BREXIT for British citizens living in Germany

If there will be no deal between the UK and the EU by the 29 March 2019, British citizens will be facing the same rules as expatriates from other non-EU member states. It is not likely that Germany will force British citizens to leave the country. If they work in Germany or are married to a German citizen they will have the right to stay here. However, they will probably require a working and/or residence permit. Problems may occur for British citizens who are unemployed or pensioners living on their own in Germany. The right to stay in Germany may not be the only problem. Even if Germany grants this right to all or most British citizens living in Germany for a certain period other EU-member states or countries like Switzerland, Norway or Iceland might see this differently. Travelling to these countries will not be the major problem but longer job or business related stays. Other issues might be whether British citizens retain the right of equal treatment, acknowledgement of university degrees or other qualifications, future pension payments or unrestricted health care.

All these uncertainties led to a sharp increase in British citizens to apply for German citizenship. In 2015, 622 British citizens applied for German citizenship while 2017 the number rose to 7,493. The procedure is – other than in the UK – relatively uncomplicated. Every British citizen is entitled to German citizenship if the following applies:

• Stay in Germany for at least 8 years. The minimum period is reduced to 3 years if certain preconditions (e.g. marriage with a German citizen) are fulfilled.
• No claim of German social security payments
• No criminal record
• Reasonable knowledge of the German language

If a British citizen will become a German citizen before the 29. March 2019 he or she will be able to keep the British citizenship. If this will be possible after the Brexit is questionable. However, a British citizen who wants to become a German citizen as well should apply for the German citizenship before the Brexit. If the naturalisation procedure ends after the date and he or she would be forced to give up the British citizenship, the application for German citizenship can be withdrawn.

Detailed information can be found on the internet.

The Brexit may also affect British citizens in their tax affairs. If British citizens leaving Germany after the Brexit they may trigger the exit taxation if they are owner of more than 1% of the share capital in a German company. There also may be negative effects on the tax effective deduction of private expenses such as contributions to British pension plans.

Little attention is given to the fact that there will be changes in regard to customs obligations after the Brexit. So far not customs issues have to be considered when travelling to or from Great Britain. This will change at the exit date. From that moment on customs regulations have to be observed. There are different rules for items for private and for business use. Items for private use which will be imported from the UK will be customs-exempt if their value does not exceed 300 Euros. For air and sea travels the maximum amount is 430 Euros. This does not apply for excisable goods such as tobacco products or alcoholic beverages. There the custom–free import is restricted to a small quantum of these goods. These amounts do not apply for goods used for business purposes such as IT-hardware, smartphones or technical equipment. Often business travelers take these items abroad and return them to Germany. To avoid problems when returning to Germany they should be declared as “returned goods”. The declaration of returned goods as well for goods for private use exceeding before mentioned maximum amount can be declared orally if there weight does not exceed 1,000 kg or their value does not exceed 1,000 Euros. If above mentioned maximum amounts are exceeded - which can easily be the case with a new smartphone and a new laptop - a customs declaration in paper or electronically has to be made. Not declaring the goods (going through the “green exit” at airport or harbors) may easily be seen as a misconduct which not only results in paying custom duties but also penalties. Travelers will also have to observe British customs regulations when travelling to the UK after the Brexit.

Customs regulations will also be applicable if individuals relocate to Germany after the exit date. In general household effects such as household goods, cars for private use, stocks in usual quantities, pets, portable instruments and equipment for business purposes etc. are custom-exempt. These goods have to be declared when entering Germany. However, there are restrictions. Most important of all is that these items shall not be sold, lent out, rented out, used as security for a mortgage or given away as a gift for a period of twelve months after entering Germany. If this obligation is not observed, customs duties and import-VAT at a rate of 19% will be due.

Author: Peter Scheller, Steuerberater, Master of International Taxation, Fachberater für Zölle und Verbrauchsteuern

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