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Trips To Europe Can Trigger Tax Probes

The new EU Exit/Entry System (EES) doesn’t just cause border delays. It can lead to investigations of your personal finances. This includes British holiday homeowners and retirees. The new EES border controls – the EU’s Exit/Entry System – came into operation on 12 October and is being rolled out progressively over six months. EES stores personal data from non-EU nationals, along with entry/exit details, each time they cross a Schengen border*.

By tracking everyone who enters and leaves, along with dates and biometric information – face and fingerprints – the system flags anyone who overstays the 90-day limit for EU non-resident status, misuses visa-free travel or uses fake identities.

It can also trace those not paying the right taxes.

“Tax authorities will be able to determine if anyone has been living ‘under the radar’ and open an investigation to claim back taxes,” said David Morley, Head of Wealth Structuring at Blevins Franks, which has been providing financial advice to British expatriates for more than 50 years.

Key exemptions apply, including for residence card holders. Property ownership alone, however, does not provide an exemption. UK resident nationals owning a holiday home in a Schengen country are fully subject to EES registration and the 90-day limit. And the possible tax probe.

What if you have a residence card?

Those going to live in the EU must navigate two distinct types of residence, each with its own set of rules:

Lawful residence refers to a legal right, as a national of one country, to live and work in another. You must ensure your residence card, permit or visa is kept up to date.
Tax residence – the country which has taxing rights over your worldwide income, gains and wealth. If you meet the criteria for tax residency in a country, you are required to register with the tax authorities and submit the appropriate returns.

“Failing to comply with the tax and/or visa rules can lead to serious consequences, which for taxation range from tax investigations, backdated liabilities, interest and penalties. For immigration, denial of entry or, at the extreme, deportation,” said Blevins Franks’ David Morley.

You can check with the free visa and residence requirement guides at the European Emigration Advisory Service (EEAS) European Emigration Advisory Service: Residency Guides | Blevins Franks

In the past, it may have been easier to live ‘under the radar’ and avoid declaring tax residency. Today, however, the landscape has changed significantly.

EU countries apply the 183-day rule to determine tax residency. If you spend more than six months a year there, or meet other residency criteria, you are legally obliged to declare worldwide income and gains. Residents of Spain and France are also required to declare their total wealth or real estate assets, respectively.

“If you do not have a current residence permit, and/or have not correctly declared yourself for tax, you should seek assistance immediately from someone properly authorised in your country of residence to regularise your status and avoid escalating consequences,” said David Morley.

“If you are considering a move to the EU, the idea of becoming tax resident can feel daunting – but it doesn’t have to be. With proper planning, tax residency can actually improve your financial position. Many British nationals have found that relocating with expert guidance has helped them reduce tax on pensions, investments and savings.

“It can also help you skip the queue at the airport.”

*All 29 Schengen zone countries are implementing the Entry/Exit System. The Schengen area includes Iceland, Liechtenstein, Norway and Switzerland, along with all EU member states except Cyprus and Ireland. Cyprus is in the process of applying to join Schengen.

EES is in gradual implementation over six months, allowing countries time to adjust and implement the system, with full operation everywhere by 10 April 2026.

The EES applies to all non-EU nationals visiting the Schengen area for a short stay. ‘Short stay’ is classified as 90 days within any 180-day period – longer stays are not permitted unless you have obtained the necessary permit or visa.

Moving Abroad Checklist

Initial Considerations

Will your partner be travelling with you?

If so, what will they be giving up in your present home and will they be able to continue with their career in your new home? You will need to check whether a separate visa is required for your partner to work or if your visa gives that right. If they are unable to work you will need to decide on the effect on your finances and what alternatives are available to give a fulfilling life (home business, training, voluntary work).

Are you taking family with you?

Moving with family raises many exciting opportunities, but also can create challenges. The HSBC Expat Explorer survey indicates that expat kids can take six months to settle in to their new country (see article). Getting young or even older children to prepare to move and leave their friends and family behind can be a challenge and should be thought through.

The options for education is another area that needs to be thought through.

Moving your child to a new country with a different education system can be a great opportunity to broaden their experience, but if they are close to key exams the timing can make this inadvisable. If you do take your family with you, it is important to decide between joining the local school system or choosing an international school.

Where will you be living?

Whether you will be living in a house or apartment, furnished or unfurnished, these decisions will affect what you need to take with you. The time you are planning to live overseas will also affect whether you should leave your property at home empty, rent it out or sell it. See the article Sell, Store or Ship.