Brexit - current situation & outlook
On 23 June 2016, the UK held a referendum on whether the UK should remain part of the European Union. The outcome of the referendum was a narrow majority vote. As a result, the UK should exit the European Union (EU).
Britain officially started the Brexit on 29 March 2017, by triggering article 50 of the Lisbon Treaty.
What is the UK actually exiting from?
“Brexit” means – well, Brexit – but more specifically, it means that the UK intends to leave the European Union. It may still remain in the EU Customs Union and European Economic Area, join the European Free Trade Association or indeed, take on elements of the Schengen Agreement – or some complex amalgam of the above and more.
The referendum itself has no legal effect on the UK’s membership of the EU. It is an indication of the view of UK voters. In order to affect an exit from the EU the Prime Minister must give notice under Article 50 of the Lisbon Treaty.
When Article 50 is invoked, there will be a period of negotiation. The Lisbon Treaty allows a two year period which can be extended with the agreement of all EU member states if agreement is not reached in that time. If there is no agreement to extend, the withdrawal date of the UK from the EU will be two calendar years from giving notice.
During the period of negotiation, EU Treaties will still apply to the UK. However, there are large areas of UK law and regulatory practice that are currently based on EU law and practices. For the vast majority of legislation, the UK will have to adopt equivalent or replacement national legislation.
On 19 March 2018, it has been agreed that the transitional period will last from 29 March 2019 to 31 december 2020.
Article 50 extension
Since the first request of former Prime Minister Theresa may to delay Brexit until 30 June 2019, there have been considerable negotiations for a withdrawal agreement between the UK and the EU. Both parties agreed on several extensions of the article 50 period to allow for the ratification of the withdrawal agreement.
On 29 October, the European Council adopted the final decision to extend the period under Article 50 until 31 January 2020.
On 31 January 2020 at midnight, the UK left the EU. However, during a transition period until 31 December 2020, the UK will remain to comply with EU rules and continue to contribute to the EU’s budget. This transition period aims to provide more time for citizens and businesses to adapt.
The UK will continue to apply Union law, but it will no longer be represented in the EU institutions (EU Parliament and European Commission) and therefore no longer have any voting rights. But the European Court of Justice will continue to rule over legal disputes in which the EU is involved.
This means that during this transition period a lot things stay the same in terms of travelling from the EU to the UK, freedom of movement and EU-UK trade will continue without extra charges.
The transition period can be extended once for a period of up to one or two years, if both sides agree to this before 1 July 2020.
The negotiations on the future partnership between the EU and the UK will start once the UK has left the EU. The framework for this future relationship was set out in the political declaration agreed by both sides in October 2019. Immediately after leaving the EU, Prime Minister Johnson 'threatened' to implement full customs- and border controls to increase pressure on the European Commission in view of the trade negotiations. Keep in mind that, if both parties do not come to an agreement and the transition period is not extended before 1 July 2020, ‘hard Brexit’ is still a possibility.
BDO is sharing its knowledge about the tax & legal impact of the UK exit out of the EU in the news items displayed below.
Our experts can help you assess the impact on your business
The economic, business, legal, regulatory and tax implications will be determined by the political process and negotiations yet to unfold, but BDO is well-positioned to monitor and inform its clients.
Our experts can support your business in:
- Assessing the impact of the upcoming market conditions and regulations
- Identifying risks and opportunities
- Working out new strategies to deal with the new economic and regulatory environment
In close collaboration with our UK colleagues, BDO Belgium is on top of any news on the progress of the UK withdrawal procedure.