I. General questions
According to the current timetable, the UK is set to leave the EU at the end of 29 March 2019. It is true that the EU and the British Government have negotiated a Withdrawal Agreement providing for a transition period to the end of 2020 (which can be extended once by a maximum of two years). In this transition period, EU law would basically remain in force in the UK. The Withdrawal Agreement, along with the transitional period, will however only take effect if the European and British Parliaments ratify the agreement. Ratification by the European Parliament is to take place on schedule in February/March. Britain’s Parliament has been considering the overall package of the Withdrawal Agreement and the Political Declaration and rejected the Withdrawal Agreement by a majority on 15 January. The next procedural steps in the UK are a matter for the British Government. Should no ratification take place, the Withdrawal Agreement, along with the transitional period, will not take effect, and the departure will be “disorderly”.
What happens if there is disorderly departure, and when will it happen? What does “WTO third country scenario” mean?
Once the UK has withdrawn from the EU, it will be a “third country”, i.e. it will not an EU Member State. As things stand at present, the departure is to take effect at midnight in the night of 29-30 March. A disorderly departure means that there is no valid withdrawal agreement in place between the EU and the UK which provides transitional rules.
As there will be no free trade or customs agreement in place, trade relations will then be exclusively based on WTO rules for third countries. The framework for this is provided by the General Agreement on Trade and Tariffs (GATT) and the General Agreement on Trade in Services (GATS).
Specifically, this means that more favourable arrangements contained in EU law, such as the rules of the single market and the EU customs union, cease to apply. As a result, customs declarations, customs controls and import duties will be in force, and regulations will no longer be mutually recognised. (Further specific consequences of the change of status of the UK to that of a third country are discussed under II.) Specific questions.)
As a member of the WTO in its own right, the UK will remain part of several plurilateral agreements within the WTO, such as the Information Technology Agreement (ITA), the Agreement on Trade in Civil Aircraft (TCA) and the WTO’s pharmaceutical products initiative. The reduced tariffs on the products covered by these agreements will remain in place. Also, the accession of the UK to the WTO’s Government Procurement Agreement once it leaves the EU is being negotiated within the WTO.
What preparations is the Economic Affairs Ministry making for a disorderly departure? What is the German Government in general doing?
The German Government is engaged in intensive preparations for the UK’s departure from the EU, including a potential disorderly departure:
In order to at least partially alleviate the consequences of a disorderly departure, the German Government has presented several pieces of : these include transitional rules on labour and social insurance.
A is to ensure that Brexit itself does not trigger undesired consequences for taxation even though all the main tax measures will have already been adopted before the departure. Also, the act will contain rules on financial services which aim to avoid undesirable effects due to a no-deal departure.
The amendment to the , which entered into force in January 2019, extends the possibilities to organise an orderly switch from a “limited” to a German corporate structure.
Further to this, other measures are planned below the level of legislation, e.g. relating to residency and labour market issues, the staffing of the customs service and various licensing bodies.
In particular, the Economic Affairs Ministry is focusing on getting information out to the business community, e.g. via a regular dialogue with business associations and companies about Brexit, information services like this website, and a specific hotline for Brexit. Here, the Ministry is working closely together with business associations, chambers of commerce and other organisations, which themselves are offering comprehensive information about the impact of and preparations for Brexit.
You can find further details in Section II.
In December 2018, the European Commission presented a Communication sketching out the specific emergency planning at European level for a disorderly departure: It announces 14 narrowly defined, temporary and unilateral statutory measures at EU level, e.g. in the fields of financial services, air traffic, road haulage, dual-use goods and climate policy.
In the course of this, the European Commission has also published a comprehensive Q&A list on the repercussions of a disorderly departure and the envisaged measures.
If you have questions about Brexit, you can contact the Economic Affairs Ministry’s hotline by phone (030-340 6065 61) or email (). It will provide you with general information about the state of the negotiations and other questions, e.g. on the Withdrawal Agreement or the consequences of a disorderly departure, in some cases referring you to the relevant federal ministry. The Federal Government is not however permitted to give legal advice.
You can find further information
- on the
- on the and the website of the
- on the
- on the
- on the
- on the
- on the
- on the
- on the and from the relevant chambers of industry and commerce
- on the
- on the
- on the
The following sections also contain pointers to further sources of information and hotlines on specific issues.
II. Specific questions
1.) Exports of goods
If there is a disorderly departure of the UK from the EU, from the time of departure the same rules – in terms of customs formalities and other rules – will apply to trade in goods with the UK as apply to trade in goods with other third countries (i.e. other countries outside the EU).
This means, for example, that customs declarations need to be made, and when goods are imported from the UK they are subject to the tariffs imposed by the EU on third countries under WTO law. The EU imposes an average tariff of 5%, but the actual rates vary according to the respective product (e.g. a 10% tariff applies to cars). You can find the specific tariff in the EU’s .
The import may also be subject to levies like import VAT and excise tax. Further to this, an import or export licence may also be required for some sectors, e.g. for the export of dual-use goods.
In the event of an unregulated withdrawal by the United Kingdom, the export of dual-use items to the United Kingdom would be subject to authorisation as of the date of withdrawal.
In December 2018, the European Commission presented a proposal for a Regulation to grant a General Export Authorisation for exports of dual-use items to the United Kingdom. This would automatically authorise all exports that meet the conditions of the General Export Authorisation. Internal EU-Euopean Union discussions are still continuing.
EU free trade agreements provide for preferential tariff treatment for goods of EU origin. With an unregulated withdrawal from the EU, the United Kingdom falls outside the scope of the EU’s free trade agreements and customs unions.
As a result, British inputs in export goods can no longer be considered as an EU share and can therefore no longer be used to comply with the rules of origin in the EU’s free trade agreements. After the withdrawal of the United Kingdom, the EU share of an export good must therefore comply with the respective rules of origin of an EU free trade agreement without adding British inputs, so that the export to the country of the contractual EU partner can take place under the preferential conditions of this free trade agreement.
Further information on preferential origin can be found on the and the European Commission.
2.) Product regulations
General questions: I sell a product in Germany/the EU that has been assessed for conformity by a British notified body. Can I sell my product in Germany/the EU after the UK’s withdrawal?
According to the relevant EU regulations, notified bodies carrying out conformity assessments must be established in a Member State of the EU and designated by a notifying authority of the Member State. In the event of an unregulated withdrawal, the notified bodies of the United Kingdom can therefore no longer carry out this task.
If a product, for which the inclusion of a notified body in the relevant EU product legislation is required, is to be placed on the market in the EU after an unregulated withdrawal of the United Kingdom, the product must be subject to a conformity assessment by a notified body within the EU.
Further information can be found on the website of the European Commission.
Chemical products: My company acquires chemical substances from a UK-United Kingdom company that registered these with the ECHA according to REACH. Will this registration remain valid? What problems might there be?
The registration does not necessarily remain valid. The UK-United Kingdom company would have to appoint an Only Representative in the EU or relocate to the EU itself. Otherwise the registration would no longer be valid following an unregulated withdrawal.
Automotive sector: What happens to British type-approvals for motor vehicles in the event of an unregulated withdrawal? Will EU type-approvals still be recognised in the UK after leaving?
In the event of an unregulated withdrawal, as of the date of the withdrawal, the UK Vehicle Certification Agency (in charge of type-approval procedures) will no longer be an EU type-approval authority according to the relevant Directive.
Therefore, motor vehicles intended to be placed on the EU market after the date of withdrawal require a type-approval issued by an EU authority. The European Commission has adopted a proposal for a Regulation allowing type-approvals issued by the UK authority to be transferred to an EU authority under facilitated conditions before the United Kingdom leaves.
The Federal Government cannot provide any information on whether EU type-approvals would still be recognised in the United Kingdom after its withdrawal. Please contact the relevant British authorities in this matter. Further information can be found on the .
Pharmaceutical products: Who can I contact if I have Brexit-related questions about the approval of medicines?
If you have any questions regarding the approval of medicines in connection with Brexit, you can also contact the (Bundesinstitut für Arzneimittel und Medizinprodukte) by e-mail (); you can also find further information on Brexit on the website of the Federal Institute for Drugs and Medical Devices.
If you have any questions regarding the approval of vaccines and biomedical drugs in connection with Brexit, please send an email to the Paul Ehrlich Institute (pei). On its , the Paul Ehrlich Institute also provides information on Brexit.
3.) Company law
What happens to companies that have the legal form of a British “Ltd” and have their registered office in Germany?
An unregulated withdrawal of the United Kingdom means that companies with a British legal form can no longer make use of the freedom of establishment and should no longer be recognised in Germany as legally capable companies under foreign law.
On the basis of the Federal Court of Justice case-law regarding the law applicable to companies incorporated under the law of third countries, it can be assumed that the companies concerned will then be treated as one of the subsidiary legal forms available in Germany, for example as a general partnership (OHG) or as a private company under civil law (GbR). If necessary, individual companies, such as one person limited companies, will then be treated as sole traders in Germany. This can result in considerable liability risks to the detriment of the shareholders, particularly in the case of former British corporations.
The companies affected can be converted into a German legal form if they wish to avoid this. To facilitate this, an amendment to the German Transformation Act came into force in January. Under this amendment, companies that notarise their plans to merge with domestic companies in good time before the withdrawal takes effect can still carry out the remaining procedural steps within two years of this date.
4.) State aid and competition law
What are the consequences of an unregulated withdrawal for the competition law, for example in the case of merging companies?
In the event of a disorderly withdrawal, EU competition and merger rules will generally no longer apply to the UK as of the date of withdrawal. This has the following consequences in the area of competition law:
With the withdrawal, the United Kingdom will no longer fall under the “one-stop shop” system, according to which a notification to the European Commission is sufficient for the clearance of a merger procedure with a cross-border dimension. It might be necessary to follow-up with an additional notification of a merger in the UK.
After an unregulated withdrawal, violations of European antitrust law by companies in the United Kingdom may still be forwarded to the European Commission’s jurisdiction (parallel application of EU antitrust law by the European Commission and national competition authorities) should the case be connected to the internal market of the EU. EU membership is irrelevant for sanctions, as these can be imposed regardless of whether a company is based inside or outside the EU.
In the event of aid being granted by UK authorities, European state aid law would not apply from the moment of an unregulated withdrawal; only the WTO general rules would apply. Information on the legal situation of state aid in the United Kingdom following an unregulated withdrawal can be found on the .
In the case of aid granted by German authorities to companies based in the UK, European state aid law would continue to apply provided that this would have an impact on competition in the internal market of the EU.
5.) Trademark and patent law
An unregulated withdrawal will have no consequences for European patents, as the underlying European Patent Convention applies irrespective of UK membership of the EU. If the UK was named upon application for a European patent with the , the patent will continue to be valid according to the EPO even after withdrawal.
Information on the consequences of an unregulated withdrawal on Union trademarks can be found on the website of the European Commission. A comprehensive catalogue of questions and answers can also be found on the .
6.) Financial market/insurance
Who can I contact regarding Brexit-related questions about banks, insurance companies and securities?
Generally, in the event of an unregulated withdrawal, UK financial companies (in particular banks and insurance companies) would be considered as third country companies after the date of withdrawal and would no longer be allowed to conduct business in Germany on the basis of existing permits. In order to prevent risks for financial stability and market distortions, the Federal Government has decided to introduce the Brexit Tax Accompanying Act in order for the Federal Financial Supervisory Authority:
- to allow British credit institutions, which using their European passports previously operated cross-border in the EU, to continue their activities in Germany until the end of 2020 at the latest, provided this is necessary to avoid disadvantages for the functioning or stability of the financial markets and provided the transactions are closely related to existing contracts at the time of withdrawal, and
- to avoid disadvantages for German policyholders and beneficiaries under insurance contracts, to grant British insurance companies, which had previously been active cross-border in the EU using European passports, a transitional regulation for their business in Germany until the end of 2020 at the latest. However, this only applies to the settlement of those insurance businesses that were concluded before the date of withdrawal.
The Federal Financial Supervisory Authority (BaFin) answers further important questions on banks and insurance companies in connection with Brexit . You will also find important information on securities here.
The Deutsche Bundesbank has also provided some information on its website for credit institutions that are considering relocating in the course of Brexit. You can also contact the hotline (+49 69 9566 7372) and write to this central email address ().
With the Brexit Tax Accompanying Act, the Federal Government has also adopted a draft law which, even in the case of an unregulated withdrawal, is intended to prevent the withdrawal alone triggering negative legal consequences for the taxpayer, even though all significant tax-relevant actions have already been taken before the withdrawal.
8.) Transport and tourism
In the event of an unregulated withdrawal, the United Kingdom leaves the European Common Aviation Area immediately on the date of the withdrawal. Appropriate steps are currently being discussed to avoid a disruption of air traffic. In December 2018, the European Commission presented a proposal for a Regulation to grant UK airlines traffic rights for flights from the UK to the EU and vice versa by 30 March 2020. This is conditional on the UK granting the same rights to European airlines. Internal EU discussions on the Commission proposal are still continuing.
In December, the European Commission presented a proposal for a Regulation granting British transport companies market access in the EU until 31 December 2019. This is conditional on the UK granting the same rights to EU transport companies. Internal EU discussions on the Commission proposal are still continuing.
The CEMT authorisation quota can be used independently. Holders of annual or monthly CEMT authorisations will continue to have access to the UK road haulage market. You will be informed of all application formalities and deadlines in good time on the website of the Federal Office for Goods Transport.
Will EU citizens need a visa to travel to the UK in the future? What about British citizens travelling to the EU?
The European Commission has presented a proposal for a Regulation exempting British citizens from requiring a visa for short stays in the EU in the event of an unregulated departure. It covers stays of no more than 90 days per period of 180 days. This is subject to EU citizens in the UK also being exempt from requiring a visa for short-term stays. Internal EU discussions on the Commission proposal are still continuing.
Roaming: Currently, you can use your mobile phone in the United Kingdom at the same cost as in Germany (“roam-like-at-home”). What regulations would apply in the event of an unregulated withdrawal?
In the event of an unregulated withdrawal from the EU, British mobile operators would no longer be subject to the European roamin regime, i.e. the current EU price caps for the use of intra-European networks would no longer apply. The transmission of data, telephony and SMS by mobile phone during a stay in the United Kingdom would then only be subject to the very broad United Nations rules for international roaming.
European and UK mobile operators must review whether their wholesale and retail roaming arrangements need to be renewed in the event of an unregulated withdrawal. This means that higher roaming charges at wholesale and retail levels are possible after an unregulated withdrawal. As an end customer, you can contact your mobile phone provider to find out which conditions would apply to your tariff.
9.) Labour market
With regard to the right of residence of British nationals, the Federal Government is planning a transitional period of initially three months that can be extended. During this period, British citizens and their family members who have been entitled to freedom of movement can continue to live and work in Germany without a residence permit. To continue their stay in Germany after the end of this transitional period of three months initially, the persons concerned will need a residence permit to pursue gainful employment. They would have to apply for a residence permit with the competent immigration authority during the transitional period.
Yes, recognition of a British professional qualification granted before leaving the EU remains valid.
In the event of unregulated withdrawal, the freedom to provide services guaranteed by EU law, including the right to post workers across borders, would no longer be applicable in the UK. The EU Posted Workers Directive, which governs working conditions for posted workers, will also cease to apply in the UK in the event of an unregulated withdrawal. Whether and under what conditions posted workers can still be posted to the UK will depend on the legal situation in the UK regarding the provision of services by service providers established abroad. For further information, please contact the relevant UK authorities.
10.) Data protection
In the event of an unregulated withdrawal of the UK, the transfer of data will be governed by the rules of the EU Data Protection Regulation applicable to third countries. Under this Regulation, the transfer of data could take place on the basis of an adequacy decision. As things stand at present, however, it is to be expected that no such adequacy decision will be taken at the time of an unregulated withdrawal.
In this case, a transfer of data to the United Kingdom would be permitted in exceptional circumstances, if, for instance, the person concerned has given his consent to the transfer, the transfer is necessary for the performance of a contract or is necessary for important reasons of public interest. Alternatively, “appropriate guarantees”, such as the use of so-called standard contractual clauses or binding internal data protection rules in accordance with Article 47 of the EU General Data Protection Regulation, could be considered as a basis for the transfer of data. Standard contractual clauses are clauses which companies that transfer data can contract with their business partners and under which UK companies undertake to comply with certain data protection standards.
11.) Procurement law
Can my company still bid for public contracts in the UK in the future - and vice versa can British companies do so in Germany?
Under German procurement law, British companies will still be able to bid for public contracts in Germany. Further information can be found on the website of the European Commission.