Brexit centre

The decision of the UK people to leave the European Union is one of the most significant events to occur in the history of the EU. Because of our geographic, social and economic ties with the UK, Ireland will experience the greatest impact of this decision among EU countries. The land border makes the situation particularly onerous. Ireland currently operates a trade surplus with the UK and customs checks and controls are increasingly likely.

Chartered Accountants Ireland

Latest Brexit news

Brexit

This past week saw the European Commission President tell the UK that the door to the EU remains open should it wish to change its mind about leaving.  In other news, Taoiseach Leo Varadkar was challenged in the European Parliament this week on whether he is trying to stop Brexit and the UK has released further details on the Withdrawal Bill. The door remains open The President of the European Commission Jean-Claude Juncker said in the European Parliament this week that the door remains open for the UK to change its mind on leaving the EU. Referencing a relatively unknown provision Article 49, the President said in Strasbourg “We are not throwing the British out, we would like the British to stay, and if they so wish, they should be allowed to do so…. Even if the British leave under Article 50, then Article 49 would allow them to accede again, and I would be happy to facilitate that.” This was the second time in a matter of days that Mr Juncker urged the UK Prime Minister Theresa May to reverse the UK’s decision to leave the EU. The UK’s reaction to the comments was mostly along the lines that Brexit was a decision of the British people and it will not be reversed.   However various media reports say that Facebook is widening its investigation into possible Russian meddling on social media in the Brexit referendum.  This is likely to add to the growing debate about whether a second referendum should be held. Taoiseach challenged in European Parliament Taoiseach Leo Varadkar spoke in European Parliament on Wednesday as part of a leader’s debate on the future of Europe. During his speech, the Taoiseach was forced to respond to an allegation by the former UKIP leader Nigel Farage that he was involved in a conspiracy with former UK Prime Minister Tony Blair to put a stop to Brexit.  The Taoiseach denied the accusation saying “I've never met Tony Blair and I'm certainly not involved in any plot for a second referendum”. Mr Varadkar was asked if he would welcome a second vote on the UK leaving the EU and stated "I don't think it would be constructive or helpful for the leader of another country to be advising that other country on whether they should or should not have a second vote." But he did say that Ireland had two votes on same issue in the past, citing the current abortion debate and the divorce referendum. Brexit Shorts UK release more details about the EU Withdrawal Bill Smaller countries should not have to “plug the hole” in the EU Budget following Brexit, says the Dutch Finance Minister It will be challenging to implement the promise of avoiding a hard border, says Irish negotiator Brexit will not be a catastrophe for financial services says former Bank of France governor Read all of our Brexit updates on the dedicated Brexit section of our website.      

Jan 18, 2018
Tax

This past week saw Germany take a hard line on the UK’s hopes that financial services are included in any trade agreement reached with the EU.  In other developments, the UK Prime Minister last week met with major finance businesses to discuss Brexit and asked that they emphasis to other EU countries the benefits for Europe of the UK’s financial centre. Germany takes a hard-line on financial services German government officials have reportedly said that any trade deal between the UK and the EU can only include financial services if the UK pays ‘substantial’ amounts into EU budget and continues to follow EU law. The comments emerged as UK Chancellor Philip Hammond and Chief Brexit negotiator David Davis travelled to Germany last week to highlight the important relationship that exists between the UK and Germany.  The strong German stance might thwart the UK’s hopes that a bespoke trade deal can be agreed when the negotiations on the future relationship between the EU and UK begin. The EU has said from the outset that the UK cannot ‘cherry pick’ aspects of EU membership. Norway and Switzerland, both non-EU countries have some access to the EU’s Single market but they have to pay into the EU Budget.  But the UK has reportedly ruled out a Norway-style arrangement.  Next round of talks Trade discussions are scheduled to start in March this year with a completion date pencilled in for October 2018. The EU has hinted that the UK can expect to receive a deal like the Canada/EU trade deal which doesn’t incorporate financial services.  But the UK is believed to be hoping for more from the future relationship. It’s thought that over 5,400 UK firms rely on the EU’s passporting rights to do business in the EU and over 8,000 EU companies use passports to provide services in the UK.  So a loss of passporting rights is likely to be costly and disruptive. Prime Minister meets finance companies The UK Prime Minister Theresa May met executives from major finance companies last week to give them a clearer picture of what Brexit might mean for their businesses and how financial services might be safe guarded.  UK Chancellor Philip Hammond accompanied the Prime Minister when she met senior executives at firms which were reported to include Goldman Sachs, JP Morgan, HSBC to discuss the opportunities and challenges brought about by Brexit. Company representatives were told by the Prime Minister to emphasis the benefits of the UK’s financial centre for Europe in their conversations with other EU countries. A Downing Street spokesperson said the business leaders at the meeting "were united in emphasising the need for as much certainty as possible.” The statement said “The conclusion of phase one talks were deemed to have provided reassurance and the business leaders gave their views on how to maximise the benefits of an implementation period.” The Chancellor said “the UK’s financial services sector was an enabler of the real economy across Europe and that any moves to undermine it risked undermining Europe’s economies. There was agreement that fragmentation of the European market would likely benefit centres outside of Europe.” Brexit shorts Michel Barnier reiterates that UK banks will not automatically have passporting rights into the Single Market on Brexit The UK government’s Brexit sectoral analyses show the extensive links between Ireland and the UK Cambridge Econometric study predicts job losses if a Brexit deal is not reached Read all of our Brexit updates on the dedicated Brexit section of our website.

Jan 15, 2018
Brexit

This week saw Germany take a hard line on the UK’s hopes that financial services are included in any trade agreement reached with the EU.  In other developments, the UK Prime Minister this week met with major finance businesses to discuss Brexit and there has been a lot of coverage about the increased VAT costs that UK companies might face on imports following Brexit. Germany takes a hard line on financial services German government officials have reportedly said that any trade deal between the UK and the EU can only include financial services if the UK pays ‘substantial’ amounts into EU budget and continues to follow EU law. The comments emerged as UK Chancellor Philip Hammond and Chief Brexit negotiator David Davis travelled to Germany to highlight the important relationship that exists between the UK and Germany.  The strong German stance might thwart the UK’s hopes that a bespoke trade deal can be agreed when the negotiations on the future relationship between the EU and UK begin. The EU has said from the outset that the UK cannot ‘cherry pick’ aspects of EU membership. Norway and Switzerland, both non-EU countries have some access to the EU’s Single market but they have to pay into the EU Budget.  But the UK has reportedly ruled out a Norway-style arrangement.   It’s thought that over 5,400 UK firms rely on the EU’s passporting rights to do business in the EU and over 8,000 EU companies use passports to provide services in the UK.  So a loss of passporting rights is likely to be costly and disruptive. The UK Prime Minister Theresa May met executives from major finance companies yesterday to give them a clearer picture of what Brexit might mean for their businesses and how financial services might be safe guarded.   VAT costs to increase for UK importers At the moment, VAT registered importers in the UK can import goods from any EU country and delay paying any VAT until a later date.  However when the UK leaves the EU, UK importers may have to pay VAT at the point of entry at the same time as customs duties are paid.  The importers may be able to claim this VAT back at a later date but this dramatic change in practice is likely to cause serious cash flow issues and added administration for traders.  Furthermore it could cause extra processing time at ports and border entry points which are not desirable. The provisions are contained in the Taxation (Cross-border Trade) Bill which had its second reading in the UK parliament this week. Conversely Irish traders who import goods from the UK will face a similar problem as any goods will be treated as coming from a country outside of the EU and under current VAT legislation, import VAT must be paid at the time the goods enter the country rather than on the next VAT return.   Chartered Accountants Ireland has been calling on the Irish Government to introduce the postponed method of accounting for VAT on Brexit which will have the effect of postponing any VAT charge until the next VAT return filing date.  Several EU countries with land borders with countries outside the EU have introduced this method to alleviate the cash flow issues it brings.  Read more about this in our submission to the Minister for Finance. Brexit Shorts Michel Barnier reiterates that UK banks will not automatically have passporting rights into the Single Market on Brexit The UK government’s Brexit sectoral analyses show the extensive links between Ireland and the UK Cambridge Econometric study predicts job losses if a Brexit deal is not reached Read all of our Brexit updates on the dedicated Brexit section of our website.

Jan 11, 2018

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