The UK exited the European Union on the 31 January 2020 leaving an 11-month transition period during which negotiations on the future relationship between the UK and the EU will take place.
Now is the time to pay attention and analyse where your business needs to take action and ensure your business can withstand all potential outcomes from Brexit. The past 2 years have been marred with uncertainty, by keeping on top of the negotiations and agreements, we hope to deliver some certainty for our clients over the coming year.
This week the European Commission published a 46 page Negotiating Mandate. The document is an accessible read, and working through it, highlights where implications for your business may exist and what you need to listen out for over the coming months.
Tax & VAT
It is important for Irish businesses to keep focused on any changes in tax rules that emerge as Brexit negotiations evolve.
For imports from outside the EU into the EU, importers must pay the VAT to the relevant tax authorities at the time when the customs duties are paid rather than declare it at the time of filing their VAT returns, this may impact cash flow.
Supply Chain & Haulage
Examine your supply chain for goods that move from and through the UK, and establish if there are alternatives in terms of time and customs declarations. Lead times may need to be adjusted. The European mandate indicates that usage of road haulage tachograph technology will play a part in transiting goods.
Customs and Tariffs
Neither declarations or tariffs will apply to North South Trade, however moving goods through UK is likely to require declarations. If you are a business located in Ireland and trading with European countries but transiting through the UK, you will require declarations and in absence of Free Trade Agreements probable payment of Tariffs. Sectors such as Agriculture, Textiles and Motor are most likely to be affected.
When establishing a commercial agreement with supplier or buyer, it is important to establish the INCO terms and your businesses responsibility in relation to customs and VAT. Review the commercial contracts already in place and be aware of this when dealing with UK companies going forward.
Company Registration – EEA Membership
Every Irish Company needs at least one EEA Resident Director. If a business is currently relying on a UK based Director to fulfil this obligation, this will need to be addressed.
If your business is a Subsidiary based in Ireland, a filing exemption allows for consolidated accounts of parent company to be lodged with the Company Registration Office. To avail of the exemption the parent must be an EEA member.
Stamp Duty Relief – under Section 80 Stamp Duty Consolidation Act, in the case of a company acquisition, the acquiring company must be an EEA member
Europe wants to address unjustified barriers to trade by electronic means, to ensure an open, secure and trustworthy online environment for businesses and consumers. This should provide for consumer protection in the online environment and on unsolicited direct marketing communication. If you sell online to the UK, listen out for developments in this area.
Carriage of Bus and Coach Passengers
Regarding the carriage of passengers by coach and bus (occasional and regular services), the envisaged partnership should take account of the multilateral Interbus Agreement.
Small and Medium Sized Business
Europe wants to address the specific needs of SME’s in thee agreement with the UK, through increasing the level of awareness among SMEs and enhancing their access to useful information on rules, regulations and procedures related to doing business. Listening and engaging with your relevant enterprise organisations will be critical during this period.
For those involved in Public Procurement Contracts in the UK, Europe is seeking an agreement to provide for mutual opportunities in the Parties’ respective public procurement markets based on the United Kingdom’s access offer for accession to WTO Government Procurement Agreement (GPA).
Watch out for increased opportunities for academic research partnerships, given the level of funding that currently goes to UK Institutes.
The Common Travel Area between Ireland and the UK remains
Top of the list of EU concerns is how to ensure the UK commits to a “level playing field” over a wide range of issues. The mandate calls for “robust” guarantees to ensure that competition is fair and standards protected. Technical Barriers to Trade such as fields of standardisation, technical regulations, conformity assessment, accreditation, market surveillance, metrology and labelling will all be addressed.
Stay Informed in 2020
The UK has indicated that they want to diverge and are expected to publish their own mandate this week. We will know soon enough if we are into another period of prolonged negotiations.
This transition period will end on 31 December 2020, unless the Joint Committee established by the Withdrawal Agreement adopts, before 1 July 2020, a single decision extending the transition period for up to 1 or 2 years.
We recommend a thorough risk assessment of your business, customers and suppliers to identify where changes and alternative measures may be required. We will be paying close attention to the negotiations and developments that impact our clients over the coming months.