Tax & Legal

Brexit at Midnight: Prepared for what comes next?

Midnight tonight the United Kingdom of Great Britain and Northern Ireland will leave the EU. From 1 February, a transitional phase until the end of 2020 will begin, which means that for the time being, the UK will remain within the internal market and the customs union. Is your business prepared for what may come? Some many open questions. The free PwC-Brexit Readiness Assessment Application can help.

Current position – open questions

According to Article 127 of the Agreement, Union law will apply in principle both to the UK and in the UK during the transitional period. Furthermore, an extension of the transitional period may be decided before 1 July 2020, although the British government has declared its intention not to extend. The period until the end of the year is intended primarily for negotiations on the future relationship between the UK and the EU. If no agreement has been reached by the end of the transitional period and no extension is agreed, WTO rules will apply.

With regard to “the Northern Ireland Backstop” sticking point, the new protocol on Northern Ireland/Republic of Ireland provides for the UK as a whole to come out of the EU Customs Union and to exist as a single customs territory, with Northern Ireland included in any future UK trade deals. Northern Ireland will remain aligned to EU Single Market regulations in certain areas, including Single Market rules on goods (and certain EU VAT rules on goods). Goods moving directly from Great Britain to Northern Ireland won’t be subject to a tariff unless the good is “at risk” of being moved into the EU afterwards. Likewise, goods from third countries entering Northern Ireland will be subject to the UK tariff, unless they are at risk of being moved to the EU.

And how has the German government prepared for Brexit? On 29 March 2019, the Act on Tax and Other Accompanying Measures to the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union (Brexit Tax Act) was enacted into German law.

The Act is intended to create legal certainty in various areas of tax and financial market law and to prevent particular disadvantages that would otherwise arise for taxpayers and financial market participants as a result of Brexit. According to the Federal Ministry of Finance, the regulations were designed to cover all conceivable scenarios of exit , both in terms of timing and manner.

Finance Ministry publication of Brexit Tax Act in English

Are you prepared? – The PwC-Brexit Readiness Assessment Application helps

Are you prepared for all this? Because Brexit is far from over.

It remains to be seen what the EU and the UK will agree on in the coming months. Various scenarios are conceivable, for which your buisness should be prepared.What is clear, however, is that German businesses will have to adapt to changes in the exchange of goods and services with the UK. Our free check will help you to assess your preparedness:

Brexit Readiness Assessment App