Updated 22 February 2016: Given the number of enquiries I’ve had over the past 24 hours, either the announcement of a referendum date or Boris Johnson’s entry into the fray has really focused people’s minds. It seems a good time to bring this post from last year back up to the front page … I hope it helps with some considerations about the issue.
Original post 25 June 2015: Maybe because it’s been in the news a lot lately, or because David Cameron is in Brussels right now telling the EU what it must do if the UK is to stay in Europe when the referendum is held at some point over the next two and a half years (link), but I’ve had a few emails lately asking what the implications would be for expats in Tenerife if the UK opted to leave. Obviously, to quite a large extent, this is a matter of opinion, perspective, and judgment, but there are one or two firm facts that we can at least use to help form views. The main questions I’m asked concern medical arrangements, pensions, and residential status, and so to cover these in turn:
First, medical arrangements. Clearly the reciprocal arrangements for EU member states could stop if the UK left the EU. This would leave pensioners without an S1 system whereby their cover in Spain is funded by the UK. There is a safety net in Spain, so it’s not inevitable that pensioners would be without health cover, but there are criteria: anyone who was first registered as a legal resident in Spain (with a Certificado de Registro) before 24 April 2012, and who has remained legally resident throughout, and who has an annual income of under €100,000, and who has no other healthcare cover, can apply to be registered for free healthcare in Spain as a resident.
There is also a question over the EHIC system which is widely used for emergency care and cover by European nationals while travelling in Europe: I do not know that this has a definitive answer, at least thus far, but it seems to me to be at least questionable that these rights would continue were the UK no longer a “European nation”.
As far as pensions are concerned, the UK will pay these to whichever account an entitled pensioner requests, but David Cameron has said that if the UK leaves the EU, there will be no increases of British pensions for those living in the EU, just as pensioners living in, say, Australia, find their UK pensions frozen at the rate applicable at the point they left the UK. The Government has made noises following Cameron’s statement that suggest this may be negotiable, but the only firm statement made at present is that pensions of British pensioners within the EU will be frozen if the UK leaves the EU. The date at which the pension rate would be frozen is likely to be the date of the referendum, or its enactment into British law.
With regard to residential status, Spanish and European law gives foreign residents permanent right to reside once they have been legally resident for five years. Thus any expats in Tenerife who have been here five years as a legal resident (again, this implies being in possession of a Certificado de Registro and being able to prove essentially continuous residence, presumably by means of an additional Certificate of Empadronamiento from an Ayuntamiento) would be entitled to stay. It is not clear to me what the position would be for those who had not been here for five years, but under EU law Spain could not just expel people who had arrived here legally and who had been officially processed. Regardless of length of residence, however, the status of anyone who had not registered with the police and acquired their Certificado de Registro would be “irregular”, rather than “illegal” – just as it is at present.
When it comes to the inheritance and gift tax reductions of 99.9% newly introduced in the Canaries from January 2016, and which apply to tax residents and non-residents alike, one of the few criteria that apply to receiving the reduction is that it applies to non-residents providing they are resident in another EU member state. This is because the non-discrimination requirements are based on EU regulations, and if the UK were to leave the EU, then the discount for inheritance and gift tax would no longer be available, as it is presently not available for those resident outside of the EU.
Incidental questions I’m also asked relate to driving licences – the UK’s involvement in the EU’s photocard licence scheme would be questionable. The effect on the exchange rate is a money expert’s question and even if I were one, which I’m not, I doubt I’d be prepared to guess! Finally, legally resident expats would retain their right to resident discount on travel within Spain because it is a subsidy given to Spanish residents, regardless of origin.
Obviously the above isn’t “factual” in the normal sense, and some things which are “facts” could change because policy or decisions can be altered, or there might be residual agreements put in place were the UK to leave. But that’s my best attempt given what is known at present to address the concerns I’m increasingly finding people have. I hope it helps, and I’m more than happy for this to be discussed however you like below.