Until the end of the year nothing will change. But starting in 2021, a new comprehensive partnership with the UK will begin – one which is fair for all member states and in the interest of all citizens.
It is up to us to ensure that the EU holds together.
The UK’s departure from the European Union will mean that it is no longer part of the community and that it will have third-country status from a tax perspective. To prevent any detrimental consequences for taxpayers and companies, the Act on Tax-Related Provisions Concerning the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union (“Tax Act Relating to Brexit” for short) will enter into force.
Because the terms of the UK’s departure are still unclear, the Tax Act relating to Brexit is unique in that it covers every possible scenario. Various provisions of the Act concern business taxation, and among other things it also contains a grandfather clause for “Riester” incentives.
Regardless of the outcome, the double taxation agreement between Germany and the UK will continue to apply. This agreement ensures that income is not taxed twice. The two countries’ tax administrations can also continue to work together.
An agreement on the new partnership with the UK must be concluded by 2021. Until then everything will stay the same.
Until now, the UK has covered 13 percent of the EU budget.
German customs has created 900 new jobs to ensure that it is prepared for every Brexit scenario.
The customs administration is well prepared to carry out its tasks even in the case of a no-deal Brexit. Companies need to be prepared for changes, too.
German customs has significantly beefed up its staff numbers. Approximately 900 new positions have been approved. Most of these will be used to support the main customs offices in areas affected by Brexit.
German customs has also set up arrangements for the flexible deployment of staff, and is implementing IT-supported procedures to optimise clearance procedures. These additional measures will come into play especially if no agreement is reached on rules specifying future relations between the EU and the UK.
Besides the customs administration, German businesses also need to be prepared for Brexit. To raise awareness in the business community, informational events have taken place all over Germany. German customs communicates regularly with postal and express service providers in particular. In addition, comprehensive information has been made available online.
Businesses that trade with the UK should check whether their existing authorisations can be modified by a main customs office or if they need to apply for new ones. They should also check whether they have to register with the customs authorities and if they are set up for the electronic exchange of information with the customs authorities.
With the UK’s withdrawal from the European Union, the EU is losing one of its biggest contributors to the EU budget. While the UK will continue to be liable for its share of financial obligations undertaken while it was a member of the EU, the country’s withdrawal will nonetheless leave a dent in the EU budget. Consequently, the EU budget needs to be rethought and the remaining 27 member states will have to redistribute the contributions to the EU budget amongst themselves.
This will be done during the negotiations on the new Multiannual Financial Framework (MFF), which will take place during Germany’s EU Council Presidency. The MFF for 2021-2027 is particularly important not only because of Brexit, but also because of the coronavirus crisis. It will play a key role in the EU’s economic recovery and will enable sustainable investments in strategic goals. In light of this, Germany will work towards ensuring that the EU’s spending is focused more strongly on sustainable and future-oriented policy priorities. The MFF will be aligned to these tasks and the change in the number of member states.
As Europe’s largest economy, Germany is also the biggest contributor to the EU budget. Currently we contribute about 21 percent of the budget, and this is set to increase. At present, the EU’s annual budget is around €160 billion.
Companies within the EU that provide cross-border financial services requiring authorisation can use the EU passport. The passport enables companies that are established in a member state of the European Economic Area (EEA), and that have the necessary authorisations, to operate in all other EEA states. In accordance with the Withdrawal Agreement, the EU passport will no longer be available to UK firms after the transition period ends. Rather, they will then be subject to the rules that apply to non-EU member states (third countries).
The extent to which UK firms will still be able to provide cross-border financial services in the EU will depend on whether the EU grants them access to the EU financial market on the basis of sector-specific rules for third countries.
Therefore, all affected stakeholders – companies and customers alike – should prepare themselves for a situation where UK firms no longer have passporting rights to conduct business on the EU financial market after the transition period ends.
