On January 5, 2019 the UK Parliament rejected withdrawal from Brexit. British Prime Minister Theresa May has proposed another vote on March 12, 2019. At this time, the EU may consider offering a 21-month Brexit extension, if this extension is approved, the UK will remain a part of the EU until a formal plan is agreed to. However, if no extension is granted, the no deal Brexit will take place on March 29, 2019.
Assuming the no deal Brexit remains in place, here’s what you need to know to navigate the new rules and regulations:
GDPR:
- Guidelines have been issued by the European Data Protection Board (“EDPB”) in case of personal data transfers from the EEA to the UK, which will have the UK become a non-EU (third country) country.
- Companies that are based outside the European Union but process the data of European Union residents are required to appoint a European Union representative. UK businesses will have to appoint EU-based representatives, who will be registered with the relevant data protection authority.
- As per EDBP guidelines, EU businesses will have to adopt Standard Contractual Clauses (SCC)/model clauses produced by the Authority. In addition, there will be a need to develop and issue Binding Corporate Rules (BCRs) that are applicable mainly to intra-group data transfers or compliance with a code of conduct. Any or all these options will need to be implemented by the EU businesses by March 30, 2019.
- UK companies will have to continue to follow the current data protection guidelines until further clarification is received.
Immigration:
- EU citizens in the UK will have a choice to decide their residency and vice-versa. This option will close to applications on June 30, 2021 (which includes a six months grace period starting from December 31, 2020).
- An employee who is an EU citizen but is working in UK and decides to continue post Brexit, will have to apply for ‘settled status’ or ‘British citizenship’ for immigration purposes by June 30, 2021 (the person must have reached UK / EU by December 31, 2020). The settled status will open on March 30, 2019. After the application is successful, the applicant will be granted either settled or pre-settled status. Re-application (without limit) is allowed until June 30, 2021.
- Settled status is different to British citizenship but with settled status the holder will have the right to apply for British citizenship.
- Settled status will provide the right to work in UK, use the National Health Service (NHS), access public funds such as benefits and pensions subject to eligibility and travel in and out of UK, etc.
- In case the applicant gets pre-settled status he/she can stay in the UK for up to five years from the grant of the status. European Union citizens will be treated on par with citizens of non-EU countries for purposes of migration after Brexit and vice-versa.
Tax and Social securities:
- UK has certain independent bilateral agreements with a few EU countries like France, Germany, Netherlands, etc. with respect to taxes, social security and other benefits. These treaties will be triggered in case of a no-deal Brexit subject to directions being made by the respective governments.
- Social security liabilities will arise in multiple countries (UK and an EU country) for many employees in absence of any bilateral agreement or if the bilateral agreements mentioned above are not made effective by any of the governments.
Customs:
- The trade of the goods between UK and EU will be affected by additional paperwork, duties and VAT. All imports from EU countries to the UK will be treated in a same way that they currently do when importing goods from a country outside the EU and vice-versa.
- For importing goods from the EU or exporting goods to the EU, a business will need to register for an UK Economic Operator Registration and Identification (EORI).
- UK businesses will need to be aware of the following aspects while importing goods from any EU countries:
Register for EORI Number:
- All the contracts and international terms and conditions of service (INCOTERMS) will reflect the UK businesses as an importer.
- UK businesses will have to appoint a custom broker etc. for import declarations or do it in-house using reglator approved software.
VAT:
- HMRC has declared it will reintroduce the postponed accounting scheme for VAT i.e. VAT and duties due on imports from any foreign country including EU would be settled through a VAT return instead of immediately at port.
In Conclusion:
Business will have to consider the following aspects of a no-Brexit deal and Nucleus (info@nucleus-co.com) is available to help guide you through these new requirements:
- Prepare a list of issues that may affect the business between UK and EU.
- The contracts with customers or vendors in the EU countries will need to be reworded.
- Proper compliance with EU GDPR will be essential by March 30, 2019, mainly relating to transfer of personal data from EU to UK.
- For expats in the UK from EU and vice-versa, the companies may have to explain to the employee the implications of no deal Brexit and help them obtain a settled status, wherever needed. Companies can also plan on transferring expats between EU and UK during the transfer window open until December 31, 2020, as any transfer after that date may have to comply with stricter immigration rules and documentation.
- Any US companies with UK subsidiaries may consider opening another entity in the EU (such as the Netherlands or Ireland) to continue the smooth flow of goods and services in the EU. Registration for EORI Number may be essential.
- The company payrolls may have to be adjusted for any additional social security that the expats may have to incur (or the company, on behalf of such expats) after the no-deal Brexit.
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