EU referendum
Leaving the EU could see British citizens in the EU pay higher taxesYves Herman/Reuters

Should Britain choose to leave the European Union (EU), British citizens owning houses in France could end up paying an extra 10% in tax should they decide to sell their properties.

EU citizens wishing to buy or sell a property in France face a 39.5% tax. Aspiring buyers have to first pay the tax in France, which can then be offset when it comes to paying taxes in their native countries, as long as it is part of the 28-country bloc.

The tax comprises capital gains tax of 19%, a surcharge of up to 6% and social charges of up to 15.5%, equating to a maximum of 36.5%. The French capital gains tax and surcharge paid can then be offset against the tax due in the UK at up to 28%, while French social charges cannot be offset, meaning up to an extra 3% worth of tax is payable in the UK.

"However, non-EU citizens, pay a 33.3% tax on capital gains and face social charges of up to 15.5%, meaning Britons wanting to purchase a property across the channel could end up paying 48.5% in taxes."

Under EU legislation, EU citizens are considered tax resident in the country where they spend over six months a year, although workers posted abroad and those who look for jobs abroad can be considered tax residents in their own country even if they spend over six months abroad.

With approximately two million Britons currently residing in European countries, a Brexit could have potentially damaging tax implications for the vast majority of them.

"There's no current legislation that explicitly suggests non-EU citizens receive a worse deal tax-wise, although issues regarding employment permits and home ownership rights, which clearly have direct implications on taxes are more favourable for EU members," said David Cheetham, senior market analyst at www.xtb.com.

"Most EU countries currently have bilateral tax treaties in place in an attempt to relieve double taxation if this were to occur, however there's no guarantee this agreement would remain if the UK were to leave the EU."

In accordance with the Treaty of Lisbon, should Britain vote to leave the EU it would be granted a two-year period to renegotiate deals with other member states. However, on the tax front, that could prove an extremely difficult task, given each EU member state has its own tax system.

"It almost goes without saying that it is highly unlikely a Brexit would be beneficial with regards to negotiating tax treatment arrangements," Cheetham added.

"Whilst it may not lead to worse conditions than present, the risks are certainly skewed to the downside which has caused the vast majority of members to expat organisations to be desperate to avoid this outcome."

Leaving the EU could also put a spanner in the works of British citizens looking to relocate to countries that offer attractive tax deals.

In Portugal, new tax residents - as long as they are registered as non-habitual residents- are offered all foreign sources of income tax free for the first 10 years which, along with great weather and excellent food, has made the country a prime destination for many, particularly those wishing to retire there.

Likewise, Britons are often tempted by Cyprus' 5% tax on regular annual pensions income, while France is also seen as an excellent place for retirees wishing to cash their pension pots in one go.

However, in the event of a Brexit and should Britain fail to strike new pension deals with each member of the 28-country bloc, a Briton's pension for a period worked in a EU country could be worth less when at maturity.

Furthermore, with the pound falling amid the uncertainty surrounding Britain's future within the EU - the UK currency hit a seven-year low on 22 February - the disadvantages facing Britons living abroad in the event of a Brexit could be exacerbated.