Brexit: Sailing into the Unknown?

There are two important and world changing events happening in Europe next month. One is UEFA Euro2016 from 10 June to 10 July, hosted by France in the wake of the past year of terrorist attacks - 51 matches will be played in 10 French cities, including 12 in Paris. 

The other is the British Referendum on whether or not to leave the EU: The Brexit debate. For once it’s likely that many more will be following the political vote than the championship final which is unlikely to involve a British team.

Since the referendum was announced, experts across the world of international finance and politics have been throwing their hats into the ring and mostly confusing the general public with crystal ball statistics. 

The fear factor comes from the great unknown: No country has ever left the EU club - the closest we’ve ever come was Greece last year. Back then, as the crisis unfolded, the world watched in horror as far-right groups protested across the continent and we questioned whether the European dream and 60 years of peace was about to end. It didn’t.

So let's look at the nuts and bolts of Britain’s position within the EU and how Brexit would affect you personally as a British ex-pat or crewmember.

Free and Fair Trade

Currently UK industry exports only 5% of all manufactured products to EU member states - it imports far more. On the world stage, if we consider the UK’s position as the 5^th largest economy, Brexit supporters argue the UK will be able to forge trade links with countries outside the EU, and trade freely as part of the Commonwealth of Nations, regardless of their position in the EU. Furthermore, there is a free trade zone from Iceland to Turkey and the Russian border, allowing trade with other EU countries but without EU control, as already practiced by many other non-EU countries around the world. 

While it is possible that EU member states may decide not to grant the UK all the concessions they require if they leave, remember that before the UK joined the Common Market in the 70s, there were already trade agreements and relationships in place, and there’s every reason to expect that these could be revived. 

Freedom of Movement in the EU

Freedom of movement may be affected, however the UK is not a part of the Schengen Agreement and is very unlikely ever to join whether they leave or stay in Europe. There will still be passport controls upon entering EU member states, and EU and UK citizens will be unlikely to have all of the freedoms and liberties that they currently enjoy within member countries. Emigrating to sunnier climes for our retirement may be made more difficult, as might property ownership in other EU member states. However, this has not yet been defined and of course it works both ways, so there’s a deal to be made. 

For those Brits already living within the EU, it is unlikely that your residency will be affected. The concept of asking existing residents and property owners to move or sell would be in breach of existing conventions, for example The European Convention on Human Rights. 

A Brexit vote won’t see the UK suddenly left out in the cold. An exit strategy will need to be negotiated and some commentators hazard that this could take 10 years to complete!
 

British Yacht Crew in the EU

There are some specific EU based regulations that may affect British yacht crews if the UK votes to leave. Examples include access to red diesel, control of native and non-native species, and European marine protected areas (with a range of measures aimed at protecting the biodiversity of seas controlled by member states).

However, more salient points such as the length of time that a non-EU skipper can stay in a Schengen country (currently limited to 90 days for six months), or the length of time a non-EU flagged yacht can be moored (18 months compared to six for EEA countries), make Brexit a more attractive option for UK superyacht crews.

There is also a wide range of sailing related legislation that does not currently have an EU dimension. The majority of maritime law is still created by national governments as opposed to the European Union, for example, alcohol limits, the carriage of life jackets and different licence requirements to sail in coastal waters. Currently France does not require private UK sailors to show a certificate of competence when sailing a UK flagged boat in French waters, while Greece and Spain do.

More generally, some argue that if we leave, visiting EU countries could become more expensive and arduous, and it may affect exchange rates and mobile phone costs. However, this is pure scare mongering as the details of any exit strategy have yet to be formulated and agreed.

Ex-pat Savings and Investment Statuses 

There has been an increasing level of rhetoric from pro-EU campaigners that earnings and taxation of yacht crews and ex-pats will be affected should the UK decide to leave the Union. Politicians supposedly in the know are stirring up fears that pension pots will collapse and savings will evaporate. 

In reality, investments will always go up and down in relation to world events, just as the butterfly flapping its wings will cause an earthquake on the other side of the planet. Any major event will cause the markets to change, investments rise and fall but eventually they will stabilise. It’s also worth considering that just as markets fall, they also rise, so Brexit may not be the doomsday herald.

Bank Accounts and Taxes 

Taxation is based on residency status. Whether the UK decides to stay or leave it will have little effect on the tax that you pay or the country where you pay it, and the Seafarers Earnings Deduction would still apply to UK citizens working on yachts.

The same applies to bank accounts, which are already affected by FATCA and GATCA, meaning that financial institutions can share and report your bank account details (see our article: The Age of Compliance). 

For the majority of British yacht crews a Brexit vote will mean business as usual. 

In reality the biggest impact of an exit on yacht crews will be an increase in paperwork, but we’ve had rather a lot of practice already as part of the EU. The final outcome now rests on the showmanship of both sides over the coming weeks. 

Next week, Kevin Tullett of Infinity International makes a case for the other side! 

What are your views? Please comment below.

About the author:
A former marine engineer, Patrick Maflin founded Marine Accounts to provide financial products and services for offshore clients and yacht crew. With offices in the US, UK, AUS & NZ, we can provide comprehensive financial and tax advice wherever you are. For further information or advice please contact Patrick Maflin or call: +44 (0)7872 812765.

 

 

* Image credit: Public Domain Pictures