Regulatory Updates

New-Brexit deal Insights

The first Brexit withdrawal agreement was rejected by 432 votes to 202 votes in the United Kingdom (UK) Parliament on January 15, 2019, followed by a subsequent second defeat,  by 391 votes to 242. Now, UK and European Commission have sealed a new deal on October 17, 2019. The UK parliament is to decide the fate of the “New-Brexitdeal”. The British PM Boris Johnson requires a simple majority votes (roughly around 320) in favor of the bill for getting this new-Brexit deal through. The UK is set to depart from the European Union (EU), with or without a withdrawal agreement by end of this month, that is October 31, 2019. The New-Brexit deal remains the same (especially regarding the points such as the Immigration rights, the amount of money Britain has to pay the E.U., etc.) as the previous Brexit in most of the aspects, except for certain aspects as discussed below.

The key altered aspects of the current “revised withdrawal agreement” are as follows:

  1. “Northern Ireland” as per the new withdrawal agreement, will be a part of the “UK’s customs territory”. However, all EU rules will continue to govern the goods arriving in Northern Ireland.
  2. Importantly, customs checks will not take place on border of Ireland and northern Ireland but they will be done on ports. There will be no customs checks at a “hard” border on the island of Ireland but will be done at the point of entry into Northern Ireland.

The Northern Irish assembly will have to accord its alignment with the EU regulatory regime every four years after Brexit.

  1. No EU tariff will be leviable on :
    1. personal goods carried across by the travelers across the Irish border; and
    2. Specified exempted goods for immediate consumption

UK customs tariff will be applicable as long as the goods do not cross to Ireland or the EU market.A joint committee consisting of representatives of both the EU and UK will take decision about the goods which are at risk of entering the single market upon which UK will collect EU tariffs on EU’s behalf.

  1. Border VAT checks after the Brexit will possibly be avoided by implementing Swiss-style VAT obligation.
  2. The difference in the VAT rates of Ireland and the UK will be tracked through EU VAT compliance reporting such as Intrastat and EC Sales listing for which no border checks will be required.
  3. The EU VAT system will continue to be applicable in Northern Ireland for goods destined for Ireland.
  4. The UK authorities will collect Irish VAT at Northern Ireland entry ports.

The deal regarding services, between EU and UK is yet to be arrived upon. A wide-ranging free trade agreement between EU and UK will be made in the second stage of EU-UK talks. It is proposed that free movement of capital will be maintained between EU and UK.