EU-UK trade deal receives the royal assent of the Queen; the deal is now officially UK law
The long-awaited EU-UK trade deal between Britain and the European Union (EU) on Brexit has received the Queen’s approval in the United Kingdom (UK) just before the deadline on December 31, 2020. The deal is now transposed into British law – “The European Union (Future Relationship) Act 2020”. It has been four and a half years since the UK opted for Brexit. The deal has also received provisional approval of the European Union (EU) for a limited period until February 28, 2021.
The EU parliament will ratify the agreement before it becomes EU law. This agreement is based on international law (not EU law) and it is structured into seven parts covering various areas, such as trade and other economic aspects, law enforcement, etc. The highlights of the agreement include:
Key points of EU-UK trade deal:
- Customs formalities are now required for trade between the EU and UK. However, there will be zero tariffs/ no restrictive quotas for ‘goods’ traded between the UK-EU.
- From January 1, 2021, UK service suppliers will no longer have an automatic right to provide services in the EU.
- Suppliers will lose the benefit of ‘country-of-origin’ or ‘passporting’ (authorization) issued by one Member State.
- Free travel will be restricted – Visas will be necessary for any visitors planning on staying more than 90 days in any 180-day period and any person planning any work other than routine business meetings and conferences in the other country.
- The transfer of employees (as intra-corporate transferees) for working in an associated company will be considered as temporary migration, the maximum duration of which is capped at three years. Short-term entry for certain activities for business visitors not providing services will also be allowed. Under certain conditions, the movement of “contractual service suppliers” or “independent professionals” to supply services will be allowed.
- Professional qualifications and licenses will no longer be automatically recognized. There is yet no agreement on automatic recognition for professionals such as engineers, accountants, architects, doctors, etc. Irrespective of where the qualification was acquired, the qualifications will need individual recognition in the respective member state as per the rules applicable for third-country nationals.
- The agreement clarifies that the EU-UK may agree on improved mechanisms for recognition of professional qualification on a profession-by-profession basis in the future. Lawyers will be allowed to provide legal services relating to the international law and the law of the country where they are authorized.
- Cross-border workers and their employers will be liable to pay social security contributions in one state at a time only, and some compliances may be introduced to achieve this. The Social Security Coordination protocol (the protocol) will ensure the protection of social security benefits for individuals who move between the UK and the EU. The UK workers sent to do temporary work in an EU Member State (applying the “detached worker” rules) will only pay social security contributions in the UK itself for the period of work in that EU Member State. Similarly, if an EU worker is sent to work temporarily in the UK (from a Member State applying the “detached worker” rules), will remain liable to only pay contributions in that EU Member State.
- GDPR compliances will have to be undertaken for data privacy. The UK DPA (Data Protection Act) 2018 will continue to apply after the end of the transition period. Compliance with GDPR provisions will be required by the UK organizations even if EU GDPR will no longer apply directly in the UK. SCCs (standard contractual clauses) or other methods for data processing and transfer may be required.
- Appointment of VAT representatives in certain EU member states will be necessary.
- From January 1, 2021 the United Kingdom will lose all the rights and obligations it had as an EU Member State. During the transition period, the rights will be governed under the Withdrawal Agreement.
- Application for acquiring visas for employees travelling to EU Member States by UK nationals and vice-versa will have to be done, except when exemption is possible.
- The supply of goods and services will have administrative compliances and the same will have to be set up.
- Beginning January 1, 2021, the organizations in the UK processing information of EU residents may be required to appoint EU representatives, update contracts to incorporate SCCs (standard contractual clauses), and, on a case-by-case basis, update policies, procedures and documentation, etc.