The Migrantic partners write a weekly tax and/or immigration law column in a local newspaper. These columns are also featured below.

THE CLOCK IS TICKING! Brexit update: residence rights UK nationals and tax / social security in a no-deal Brexit scenario

The clock is ticking, a little over 2 months left. Boris Johnson has just mentioned that the UK should get ready for a no-deal Brexit unless there is a fundamental change of approach from the European Union. Where does this leave the UK nationals living in the Netherlands? 

Rights of UK citizens residing, working and/or studying in the Netherlands
The Immigration and Naturalisation Service (‘IND’) has been sending temporary residence permits in the form of a letter. The letter indicates that even in the event of a no deal, UK citizens will be able to continue residing in the Netherlands and will receive a residence permit. 

During the transitional period and up to December 31st of this year, the IND has issued a letter inviting British citizens to apply for a residence permit. Approximately 35,000 UK nationals, who were registered in the Personal Data Base before August 1st 2020, have received such a letter in which they were invited to apply online by means of their DigiD (this allows you to identify yourself when making arrangements on the internet with the government, educational institutes, healthcare, pension funds etc). 

The IND has now announced that they will no longer send out invitations (or reminders). Consequently, if you have not received the invitation letter we strongly advise you to apply (online) for a residence permit as it is mandatory to do so before the end of this year. Only this way will you be able to secure your residential rights under the Withdrawal Agreement.

If you have any questions regarding the application process or immigration to The Netherlands, don’t hesitate to call, we are happy to help.

Social security after 2021 in a no-deal Brexit situation
The European social security rules (EU Regulation 883/2004) will no longer apply in an no-deal scenario starting 1 January 2021. Both UK and Netherlands governments are of the opinion that the previous 2005 social security treaty between their countries will no longer apply. We disagree with this position and we expect that this position will be litigated and hopefully overturned by the UK and Netherlands courts. 

The intention is that a new social security treaty will be agreed between the Netherlands and the UK, which would take effect at some point after the transition period ends. It is expected that further details on the substance of such a treaty will come to light in the coming period.

Therefore the social security situation in a no-deal scenario is extremely unclear.

Some individual tax aspects after 2021 in a no-deal Brexit situation
It is important to note that becoming or remaining a resident of the Netherlands for immigration purposes does not immediately mean that you are automatically an resident of the Netherlands for tax purposes and vice versa as different criteria apply. 

For example, we have numerous clients who have registered here in the Personal Data Base for immigration and legal purposes but – based on their specific circumstances – do not pay tax here on their worldwide income because they do not have their tax residency in the Netherlands.

The bilateral tax treaty between the Netherlands and the UK will remain fully applicable and therefore the allocation of the income and capital gains between both countries will remain unchanged per 1 January 2021.

Only minor tax changes will occur after the transition period, the Dutch tax treatment of UK employees may partly change. Certain national tax regulations will no longer be applicable to UK nationals or UK residents from 1 January 2021 (this mainly relates to regulations that are based on EU-law). For example, UK residents will not be able to invoke EU laws; e.g. they are no longer entitled to Dutch personal deductions when earning 90% or more of their income in the Netherlands as from 1 January 2021, as these deductions are only provided to residents of the EU/EEA. 

Last but certainly not least; the beneficial structure as explained in our weblog will remain available after 1 January 2021 (even in a no-deal scenario) although work authorization will then likely become necessary. It is therefore much easier to implement this structure well before 1 January, next.

Please e-mail our immigration lawyer Hélène Jonker if you need more information on the immigration aspects of Brexit. Or email our tax lawyer Leon van Baal if you need further information on the tax impacts. 

Tax specialist