Brexit related publications

Brexit should still top the agenda

Where do we stand? With Brexit officially happening on 31 January 2020, the United Kingdom (UK) has now taken its final step out of the European Union (EU). Does this finally end the uncertainty for European companies?

The aim of this Brexit alert is to provide:

• A summary of the latest observed factors and impacts of Brexit on Luxembourg financial services; and
• How Deloitte can help in organizations’ potential reallocation and/or reorganization.
  

EU Commission notice on the withdrawal of the UK and EU rules in the field of asset management

On 8 February 2018 the EU Commission released a number of “Notices to Stakeholders” in relation to Brexit. These notices covered a wide range of sectors, including investment managers and MiFID firms, both of which will be of interest to asset managers in the EU.

Internal EU27 preparatory discussions on the framework for the future relationship

European Commission, Task Force for the Preparation and Conduct of the Negotiations with the United Kingdom under Article 50 TEU

Regulatory Issues | Mobility | Transport

Withdrawal of the United Kingdom and EU rules in the field of customs and indirect taxation

Subject to any transitional arrangement that may be contained in a possible withdrawal agreement, as of the withdrawal date, the EU rules in the field of customs and indirect taxation no longer apply to the United Kingdom.

Withdrawal of the United Kingdom and EU rules in the field of import/export licences for certain goods

Subject to any transitional arrangement that may be contained in a possible withdrawal agreement, as of the withdrawal date, for shipments of goods to/from third countries, including the United Kingdom, the following applies with regard to import/export licences:

• Import/Export licences required under Union Law
• Import/Export licences issues by the United Kingdom as an EU Member State on the basis of Union Law
• Goods concerned

European Council - Press Release - 16 January 2018

Report by President Donald Tusk to the European Parliament on December European Council meetings

Guidelines for the second phase of the Brexit negotiations

Discover the guidelines of the second phase of the Brexit negotiations published by the European Council.

Contingency Planning for Brexit - Managing Uncertainty and Preparing for Change

Executive Summary

With the United Kingdom set to leave the European Union in March 2019, organisations face a period of continued uncertainty with unknown consequences.

Despite this uncertainty, Brexit is an issue that can be planned for using a proven contingency planning method.

Brexit and the future of Customs

Executive Summary

Under current plans, the UK is set to leave the European single market and the customs union in March 2019. It would be catastrophic if HM Revenue & Customs’ (HMRC) new customs system, the Customs Declaration Service (CDS), is not ready in time and if there is no viable fall-back option. In 2015, around 55 million customs declarations were made by 141,000 traders. The UK’s exit from the European Union (EU) could see the number of customs declarations which HMRC must process each year increase fivefold to 255 million. A failed customs system could therefore lead to huge disruption for businesses, with delays potentially causing massive queues at Dover and resulting in food being left to rot in trucks at the border. This is a programme of national importance that could have a huge reputational impact for the UK if it is not delivered successfully.

Responding to Brexit by competing, innovating and trading

Executive Summary

Brexit poses unprecedented economic, social, political and diplomatic challenges for Ireland. So, for the past year and more, the Government has been pro-active and strategic in ensuring a coherent, whole-of-Government response to the UK decision to leave the EU.

Brexit - Customs Bill: Legislating for the UK’s future customs, VAT and excise regimes

Executive Summary

As the UK leaves the EU we are seeking a new, deep, and special partnership with the European Union.

Investment and trade are crucial to that future relationship, and in pursuing options for a new customs arrangement with the EU, the Government will be guided by what delivers the greatest economic advantage to the UK and by three strategic objectives: ensuring UK-EU trade is as frictionless as possible; avoiding a ‘hard border’ between Ireland and Northern Ireland; and establishing an independent international trade policy.

Brexit - Preparing for our future UK trade policy

Executive Summary

The United Kingdom has a long and proud history as a great trading nation and champion of free trade with all parts of the world. We want to maximise our trade opportunities globally and across all countries – both by boosting our trading relationships with old friends and new allies, and by seeking a deep and special partnership with the EU.

Brexit - Comparison of EU/UK positions on citizens' rights

Executive Summary

DExEU have released the latest joint technical note comparing the EU-UK position on citizens’ rights.

Security, law enforcement and criminal justice - a future partnership paper

Executive Summary

The first duty of government is to keep its people safe. As seen from recent events, the threats to the UK and the EU are varied, increasingly international, and can change rapidly. They include, but are not limited to, terrorism, serious and organised crime, cybercrime, illegal migration, fragile states in the near neighbourhood, and hostile state activity. In a globalised world of immediate communication and cheap cross-border travel, criminality and terrorism are increasingly agile, organised and difficult to disrupt.

Customs and trade - Potential implications of Brexit

Executive Summary

Brexit negotiations officially started in June, and the EU and UK lead negotiators’ teams must close a deal on the terms of the UK’s exit from the EU by March 2019 that will have broad implications in many areas, including customs and trade.

Brexit - Foreign policy, defence and development - a future partnership paper

Executive Summary

The United Kingdom wants to build a new, deep and special partnership with the European Union.

This paper is part of a series setting out key issues which form part of the Government’s vision for that partnership, and which will explore how the UK and the EU, working together, can make this a reality.

Each paper will reflect the engagement the Government has sought from external parties with expertise in these policy areas, and will draw on the very extensive work undertaken across Government since last year’s referendum.

Taken together, these papers are an essential step towards building a new partnership to promote our shared interests and values.

Brexit - Use of Data and Protection of Information Obtained or Processed before the Withdrawal Date - Position Paper

Executive Summary

It is recalled that the United Kingdom's access to networks, information systems and databases established by Union law is, as a general rule, terminated on the date of withdrawal.

The United Kingdom or entities in the United Kingdom may keep and continue to use data or information received/processed in the United Kingdom before the withdrawal date and referred to below only if the conditions set out in this paper are fulfilled. Otherwise such data or information (including any copies thereof) should be erased or destroyed.

Brexit - Customs related matters needed for an orderly withdrawal of the UK from the Union - Position Paper

Executive Summary

As of the withdrawal date, the United Kingdom will no longer be part of the customs and tax (VAT and excise) territory of the Union. Consequently movements of goods between the UK and the EU 27 will constitute third country trade. The principles outlined in this paper aim to ensure an orderly withdrawal of the United Kingdom from the Union in respect of customs related matters.

Brexit - Dialogue on Ireland/Northern Ireland - Position Paper

Executive Summary

The European Council Guidelines following the United Kingdom’s notification under Article 50 TEU and the subsequent directives for the negotiation of an agreement with the United Kingdom on its withdrawal from the European Union include specific provisions relating to the unique circumstances on the island of Ireland (paragraphs 11 and 14 respectively). In its resolution of 5 April 2017, the European Parliament also recognises the unique position of and the special circumstances confronting the island of Ireland.

Brexit - Public Procurement - Position Paper

Executive Summary

The withdrawal of the United Kingdom from the European Union will create uncertainty in relation to administrative procedures in the area of public procurement on-going on the withdrawal date, as to which law should govern the completion of those procedures and how tenderers and contractors from the EU27 or the United Kingdom should be treated by contracting authorities from, respectively, the United Kingdom or the EU27 Member States.

The Withdrawal Agreement should ensure that administrative procedures in the area of public procurement on-going on the withdrawal date continue to be carried out in accordance with the relevant provisions of Union law until their completion, and in accordance with the principle of nondiscrimination. 

Brexit - Intellectual property rights (including geographical indications) - Position Paper

Executive Summary

The withdrawal of the United Kingdom from the European Union will create uncertainty for UK and EU27 stakeholders alike in relation to the scope of protection in the United Kingdom of certain intellectual property rights; to the treatment of applications for certain rights and to the exhaustion of rights conferred by intellectual property rights. This uncertainty will significantly affect the conditions under which goods that are placed on the market in the Union before the withdrawal date could continue to circulate between the EU27 and the UK.

Brexit - The exchange and protection of personal data - a future partnership paper

Executive Summary

As the UK and the EU build a new, deep and special partnership, it is essential that we agree a UK-EU model for protecting and exchanging personal data which allows free flows of data to continue between the EU and UK, and provides for ongoing regulatory cooperation and certainty for businesses and other stakeholders.

This should reflect the unprecedented alignment between British and European law and recognises the high data protection standards that will be in place at the point of exit.

Brexit - Enforcement and dispute resolution - a future partnership paper

Executive Summary

The direct jurisdiction of the Court of Justice of the European Union (CJEU) in the UK will end at the point of our withdrawal from the EU.

The UK and the EU need therefore to agree on how both the provisions of the Withdrawal Agreement, and our new deep and special partnership, can be monitored and implemented to the satisfaction of both sides, and how any disputes which arise can be resolved.

Brexit - Providing a cross-border civil judicial cooperation framework - a future partnership paper

Executive Summary

As the United Kingdom leaves the European Union, the Government will seek a deep and special partnership with the EU. Within this partnership, cross-border commerce, trade and family relationships will continue. Building on years of cooperation across borders, it is vital for UK and EU consumers, citizens, families and businesses, that there are coherent common rules to govern interactions between legal systems.

To this end, the UK, as a non-member state outside the direct jurisdiction of the Court of Justice of the European Union (CJEU), will seek to agree new close and comprehensive arrangements for civil judicial cooperation with the EU.

The role and Powers of the European Parliament in the Brexit Process

Executive Summary

This document explores the role and powers of the European Parliament in the Brexit process. It describes the challenges and relevant steps and stages of the process and higlights the significance of agreement(s) to be concluded between the EU and the UK. On that basis, the Parliament’s mandate and powers in substantial terms as well as its involvement in the procedure are outlined. Some options are highlighted to enable the Parliament to adequately fulfil its mandate and play its role in the process.

The document was provided by Policy Department A at the request of the European Parliament ́s Committee on the Internal Market and Consumer Protection.

Brexit - A new tax operating model?

Executive Summary

Although the impact of Brexit on fund performance and distribution has attracted the most attention, its impact on asset managers’ corporate structures also needs to be assessed. The loss of passporting rights could force some UK asset managers to restructure their operations in the EU. Legal and regulatory issues will be the key drivers of change, but tax considerations are important too.

Brexit - How to navigate through uncertainty and be ready for any scenario

Executive Summary

Brexit has created significant business uncertainty and a potential change of the regulatory landscape for banks: the final new setting will mainly depend on the exit model that UK and EU will negotiate. Although there is no single “hard” or “soft” Brexit, the effects and implications related to the Single Market will create a material impact on the services and operating model of banks.

Indeed in case UK leaves the EU, firms in the UK no longer benefit from “passporting” rights under MIFID and CRD IV, which will bring to consequences such as restructuring of cross-border groups; need to get authorization for the competent authorities in the continental EU to access EU market.

Depending on the post-Brexit solution, legal entity set up and geographical footprint, there are a number of potential structural options Banks shall envisage.

Setting up a light presence (fulfilling the minimum substance requirements) in the continental Europe, and in particular in Luxembourg, would represent a contingency plan independently from the final scenario that will be negotiated between UK and EU.

This dual presence in UK and EU will represent a pragmatic response to the current uncertain situation that Britain’s banks shall explore. Indeed the waiting approach is much more costly that incurring in the extra costs to setting up a new entity in a continental EU country.

The financial center of Luxembourg demonstrates to have selected competitive advantages and offers favourable conditions to create the suitable ecosystem for specific activities or some parts of the value chain of products, such as: post trading activity in the derivative transactions; private banking and wealth management business; structuring, distribution and administration services of investment funds; securitization transactions, from the origination through the final payment; corporate banking, in particular trade finance product.

This report presents the competitive advantages and proven experience that Luxembourg can offer to FI in this context.

The UK’s vote to leave the EU - How will investment managers be affected?

Executive Summary

The UK’s vote to leave the European Union has created significant uncertainty for investment managers, with implications for their investment strategies, their cross-border business, and potentially their ability to retain and attract staff. Firms will need to think ahead and be prepared to take some decisions in an uncertain environment.

The UK’s widely unexpected Leave vote has introduced uncertainty over the country’s economic growth prospects and has resulted in both tactical and strategic challenges for investment managers. Preparing for Brexit will be complicated by considerable uncertainty over the timing of the UK’s invoking Article 50, the negotiating stances of both the UK and the EU, and the ultimate outcome.

Article 50 trigger - from planning to implementation

Executive summary

The Prime Minister’s announcement of the Government’s decision to trigger Article 50 (Art 50) and commence the process of the UK’s formal withdrawal from the EU is momentous in many ways. However, for financial services firms - many of which have been working on their Brexit contingency planning for six months or more - the significance of today is that it means that they now have a maximum of two years in which to implement their plans. That said, there are many sequential activities that need to be implemented within this short period, especially if a contingency plan involves establishing a new entity in one of the EU27 Member States in order to provide continuity of service to EU clients. This in turn demands early decisions on essential issues such as location and legal entity design. In practice, for many, particularly banks, two years is an extremely short time to do everything that is needed.

In terms of preparedness, the universe of financial services firms affected by Brexit divides into three broad groups and their Art 50 trigger responses are likely to be as follows:

• firms which have done detailed analysis, concluded that the impact of Brexit on their ability to service their customers will be significant and have shortlisted two to three locations for a new subsidiary to enable them to access the Single Market once the UK leaves it. These firms will quickly move to identify a single, preferred location and a selection of design scenarios for deeper regulatory discussions and implementation;
• firms which have done a limited amount of business and product line analysis and have identified areas which need further investigation.The Art 50 trigger should prompt them to mobilise additional resources to accelerate their analysis and planning; and
• firms which have done very high level analysis but have not yet fully understood either the extent of their Brexit exposure or their specific implementation challenges. These are often firms which have existing entities in UK/EU27 that they could leverage. Firms in this group would be well advised to mobilise resources rapidly to determine the full complexity of the issues they face. Art 50 should be the trigger for boards to satisfy themselves about any residual doubts they have concerning the impact of Brexit on their firm’s business, including the impact of the “severe” scenario.

In this note, we will draw out some of the practical challenges that firms have been grappling with to submit their applications for regulatory approvals and (where relevant) set up a new legal entity (Newco) in good time.

Deloitte Brexit Briefings

Executive summary

Our Brexit team in Germany recently released the third publication in their “Brexit Briefings” series. This latest document, “German industrial sectors’ ties with the United Kingdom”, reviews German industrial links with the United Kingdom and the concerns of German industrial sectors about Brexit. It received significant worldwide media attention.

This new perspective is based on information from German companies on sales and number of employees of their British subsidiaries. The information provided by the companies has been aggregated at the sector level, illustrating the sector-specific importance of the UK as a location. The article can be viewed here.

Please contact Alexander Boersch if you are interested in doing similar work relating to your own country or industry.