What would happen if the UK left the EU?

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. Whether UK nationals would be deemed to have “no right to any other healthcare cover” given that the NHS would cover them if they returned to the UK is another matter. It also seems likely that any rights under the reciprocal European healthcare system which provides British travellers with EHICs for emergency care and cover while out of the UK would be lost. These matters are among many which will form part of the negotiations to be undertaken during the Brexit procedure.

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 a matter of complete conjecture.

With regard to residence status, Spanish and European law gives residents of an EU nation state the right to reside permanently in another EU nation once they have been legally resident for five years. Once the UK leaves the EU, however, British citizens cease to become “residents of an EU nation” and so their right to remain cannot be taken for granted. That right also extends, though, to member states of the EEA (European Economic Area) and so unless there’s a “hard brexit”, the UK should remain in that group, thus preserving its citizens’ right to remain in Spain if they have been here legally for five years (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).

Assuming there is some right to remain for those who have been here legally for five years, 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 I cannot see how Spain could 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 – this is a money expert’s question and even if I were one, which I’m not, I doubt I’d be prepared to guess! One thing is clear, howeer, and that is that anyone given the right to remain would retain their right to resident discount on travel within Spain because it is a subsidy given to Canarian 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.


  1. Many thanks for your constructive comments.
    Tom Young.

  2. Janet thanks for this very interesting comment re this complex subject. I had not really thought too much about the implications but certainly your info does clarify to some extent the implications should this happen. Concerned as to the implications – yes – probably more with the health care/pension implications? Although my husband and I have been here some 16years the implications do give cause for some slight concern altho realize it is not something that will happen overnight, we hope!!

  3. It is worth mentioning that any UK citizen who was born in Northern Ireland has the right to ROI citizenship and can apply for an ROI passport.

    Not quite sure how the Spanish system would cope with this “change” in nationality though!

  4. Author

    Spain recognizes things like that, and dual nationality – a notary once was totally unfazed by a NI couple who had Irish passports but whose documents said they were British.

  5. Just shows how crucial it is that all expats who can should make the effort and vote. No! I read that UK citizens may need visas to holiday in Europe. That means we would probably need some sort of paperwork to get back from UK trips.

  6. I have not registered with the police or acquired a Certificado de Registro – but
    I do possess an NIE and I am registered on the Empadronamiento with the
    ayuntamiento in Valverde. Do I need to contact the police (if so which ones?
    There are no Policia Nacional on El Hierro?) or to seek out a Certificado de
    Registro (even though I arrived after April 2012)? Am I or would I be classed
    as “irregular” in the terms of this article if I do not do these things?

    It is likely that UK would remain a member of EEA (European Economic Area)
    like Norway and so some benefits may continue. Is there any information as
    to how Norwegian citizens fare on the issues of EHIC etc?

    Thank you for drawing attention to these issues – although I have every
    confidence that the vote will favour “Yes” by support of at least 55%.

  7. Author

    If you live permanently in Spain you are required by law to register with the police as a foreigner living in Spain. You need to approach your national police extranjeria (national police foreigners’ office) … if there is not one in El Hierro, you will need to use one in Tenerife, which is head of the western province. Yes, you need to seek a Registro – you are required to have one – if you live here without one, your status is “irregular”. The only relevance of 2012 is that it was then that the criteria for registration were imposed (see HERE), and that anyone arriving past that date won’t be able to get free healthcare on grounds of length of residence. I don’t have any info on Norwegians, I’m sorry, but I agree that the UK will vote yes. I hope so, anyway!

  8. Apologies. Of course it is a Yes vote I meant to say in my earlier post. I agreee yes should win with most of the significant business world, most of parliament and Scotland in the yes camp and only UKIP and about 25 Tory rebels openly against. But shocks can happen, as the general election told us. An untimely terrorist outrage or a couple of madcap European Human Rights rulings and all bets are off. Everyv ote will count in this one, unlike the general election where many constituencies are foregone conclusion. The euro expat vote vould make the difference.

  9. The first point to make is that the Government’s position is firmly that we should stay in and as long as the PM gets what he believes is a fair deal from the “renegotiation” that is just starting, then the Government will campaign for a Yes vote.

    As to what will happen in the event of a No, this is the more interesting question and much will depend on to what extent we pull out. For example, we could align ourselves with the likes of Norway within what is known as the European Economic Area. This is a looser arrangement than full EU membership but by and large the EEA states still all have to meet EU freedom of movement and single market requirements. This includes the reciprocal healthcare rules that cover the EHIC/S1 etc. So the EEA option would not substantially change anything (but we would lose voting rights because we would no longer be part of the EU 28).

    Of course, the UK could choose to withdraw completely from any kind of wider relationship with the EU. If that were to happen (& my personal opinion is that it will not) then (all) the reciprocal EU healthcare rules fall (including the EHIC) and UK citizens will be left without cover from the UK. It would then depend on whether the UK sought any kind of bilateral deal – post-withdrawal – with Spain in order to protect the interests of our ex-pats. Such a bilateral would of course take time to negotiate (and we would need to do the same with any other country we continued to have significant interests in) so will not be a 5-minute job and would be unlikely to be limited to just healthcare.

    My personal opinion (and that’s all it is – not Government position) is that the Yes vote will win – aside from anything else, the EU will not want to lose a country with the global reach of the UK that is also the second largest net contributor to the EU budget, so I suspect solutions will be found to enable the PM to present a “winning” renegotiation in advance of the referendum. We shall see….

  10. My main concern is will there be any restriction on money leaving Spain, i.e. if significant numbers sell their property and return to the UK. Of course the sale tax would increase significantly if you are non EU citizen. I won’t even begin to mention the implications this would have on the housing market, (sorry these things are uppermost in my mind as an economist).

  11. Clearly the reciprocal arrangements for EU member states would stop if the UK left the EU. This would leave pensioners without an S1 system whereby their cover in Spain in funded by the UK

    This is not actually clear at all, it is probably the only thing that is not clear……

  12. Author

    What is unclear? At the moment, British pensioners resident in the EU have an S1 giving them cover which is physically provided by their country of residence but paid for by the UK. That reciprocity is a direct result of the UK’s membership of the EU, and there is no mechanism for it to continue if the UK is not a member of the EU. The British authorities are saying that they will negotiate with Spain to see what alternative arrangements could be made, but it wouldn’t be as part of the S1 system. And so British pensioners would no longer have free treatment in Spain because of reciprocal S1 arrangements wbereby the UK pays, and depending on what alternative arrangements were made, could have to pay for their own cover.

  13. Ive lived her for 14yrs ihave private health so my question is this would my pension still be paid into my bank here or would I need to change to my bank in bank in uk thank you

  14. Author

    The UK doesn’t need to be in the EU for your pension to be paid into your Spanish account – or an account anywhere else, for that matter. The UK will pay your pension into whichever bank account you request, and so nothing would change for you in this respect.

  15. This is a particularly worrying time for me and my partner at the moment, we have planned for years to retire to our Spanish home which we have owned for 11 years next April when I get my state pension, with a few health worries, the reciprocal health agreement also played a great part in our timing to emigrate to Spain . If the uk vote to leave the Euro will my pension be frozen for good , would it still be paid into my account in Spain regardless and what is the position regarding the health cover. The result of the referendum could have a significant effect on my decision and I,m sure many more ex pats. Very worrying .

  16. Author

    Yes, it would still be paid into your Spanish account – UK pensions can be paid to British pensioners wherever they are, e.g. Australia, and so the UK’s membership of the EU is not an issue in this respect. As to freezes of the rate, however, that is something that David Cameron has said will happen, as currently applies to British pensioners living outside the EU. As to health cover, all that is known at present is what I wrote in the first section of the post above.

  17. If our family have permanent green NIE from police station in Las Americas since 2011 and we are on padron in San Miguel do we still need what you call a certificado de registration?

  18. Author

    your “green NIE” is your Certificado de Registro. It is what you get when you register, and it shows your NIE on it.

  19. Don’t panic. The UK won’t be leaving the EU. Over the next few months, the Spin Team will be in gear, churning out the so called facts that will convince everyone we need to stay ‘in’. Boris is only trying to grab support from the non-believers in the vain hope it will help his own position for the future. Ultimately, he will be clnvinced to change sides, everyone will be happy with the EU., and we can all look forward to peace for a short time, until the IS (immigrant shelter) is full. Then look out !! Lucky I’ll be long gone by then…..

  20. There are many countries outside the EU where pensioners still get uprated UK State Pensions, the USA for example.

    I doubt there would be any change in the Medical Care arrangements as the present system is so profitable for the Spanish.

  21. I may be in the miority on this forum, but my vote is a firm OUT. I do believe teh OUT campaigners are doing an appalling job at explaning the situation, which is simple : NOBODY KNOWS what will happen if UK votes out. International trade WILL NOT stop, the Europena countries will still wish to trade/buy from the same companies who already have their own currency (Sterling) so no change, their products will not change, so why wouldn’t they continue trading. The only truth that is known is the the UK would have the ability to re-write the rule book e.g. human rights, welfare etc. The real question is whether they will actually do so and do an effective job, a sit would be double trouble if the “PC brigade” get the upper hand in a UK that is out and compound the issues that exist e.g. foreign individual rights overriding the rights of the Nation as a whole. I could write a book, but suffice to say – OUT!

  22. You need to talk to the scandinavians who are not in the EU as such but are still allowed to trade in the EU under treaties The stark reality is that you can trade if the EU need or want your goods but try to trade in competition with the EU companies within the EU if they already have access to whatever you are trying to sell. I don’t believe that advice from the Treasury and Bank of England can be dismissed as biased because it goes against the out vote. Frankly nobody knows is a poor way to make such an important decision. A large number of Brits living in the EU and in the system courtesy of the EU agreements have a fair idea of what it will mean for them.

  23. The real winner from an”out” result, of course, would be Nicola Sturgeon and her Scottish Nationalists. lt would provide them with just the springboard she seeks for a second bite of the cherry – and indeed she may win.

  24. I am disappointed that so many people, not just on this site, appear to be going to vote for the option which currently best suits them.

    I am going to vote for the option which I believe best suits my nine-year-old grand daughter.

  25. Author

    I know that people I talk to, generally, feel they are so unable to reach a sensible decision on what would actually be the best for their descendants, or even their country, that the only way they can actually make a decision is on the grounds of self-interest. That certainly is the message I’m getting loud and clear from those who’ve made up their minds … but for those without investments or property in Tenerife, that sometimes means they’ll be voting Leave rather than Remain, so perhaps in the end it cancels itself out. I think most people will be making a relatively uninformed decision in this referendum, as a matter of necessity since real information is either scarce, or impossible to determine.

  26. Not sure what you mean Billy D about the scandinavians who are not in the EU.?Sweden, Denmark and Finland are all in the EU. Only Norway is not in the EU. Incidentally Norway has the fourth highest GDP per capita in the world and seems to be doing very well! In my experience whether in the EU or not countries not surprisingly tend to favour their own national businesses. At least that is my experience in the international engineering and construction industry. We never bothered tendering for jobs in Europe as we knew it was generally a waste of time and money.

  27. Just reporting what I have been told by a Norwegian business man when I was discussing the possible exit. His personal opinion seems to coincide with the Treasury and Bank advice and reflects his personal difficulties trading with the EU. Norway the UK is not.

  28. I was alarmed today when I asked a friend, who has a home in Spain ,if she was voting in or out. OUT..Why? Immigrants..(all of THEM) and apparently our reciprocal arrangement with Europe allows Spain and Greece not to pay their contributions…where does all this ‘information ‘ come from? I can’t argue with this sort of statement. Are we going to make a very important decision based on such unfounded statements…or can we verify or deny them…

  29. Perhaps she has misunderstood the concept that Spain and Greece do indeed receive far more benefit in monetary terms from the EU than they pay in. Whereas as we all know Germany and the UK pay in far more than they receive.

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