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The EU seeks to shield the single market from Brexit

| News | Tax / Corporate Law and Commercial Contracts / Public and Regulatory Law

The UK's exit from the EU without an agreement will involve the application of customs and new controls with a considerable increase in costs for the movement of goods and services and delays in transport. An orderly Brexit would make it possible to maintain relations and business by applying international regulations in agreements, mergers, restructurings or insolvencies.

The UK's exit from the EU has institutional, business and economic implications and that is why the European Union has made it a priority to ring-fence the single market to protect citizens and their businesses, in order to maintain stability in Europe. With a view to the decision of the 27 Member States on the extension, the processing of the Withdrawal Agreement Bill by the British Parliament and the proposal of President Boris Johnson to call elections, the desirable scenario would be to reach an agreement but the reality is that the possibility of a hard Brexit remains on the table.

This was evident during the conference organised by Andersen Tax & Legal on international trade after Brexit, which was inaugurated by Jaime Olleros, Managing Partner of Andersen Tax & Legal in Spain, and José Vicente Morote, European Legal Coordinator of Andersen in Europe, in which Jochen Müller, Deputy Director of the European Commission Representation in Madrid, María Dolores Aguirre, participated, Head of Customs at ITP Aero, Paul Finlan, Partner at the British law firm Duane Morris, Stefan Kraus, Partner at Andersen Tax & Legal in Germany, Gonzalo Cerón, Partner at Andersen Tax & Legal in Spain, Belén Palao, Partner at the firm and head of Customs and Excise, and Ignacio Aparicio, Partner and Corporate Legal Coordinator at Andersen in Europe.

As the experts explained during the day, within the framework of a potential abrupt exit by the United Kingdom, it would automatically be considered as a third state in its commercial relations with the European Union, so that commercial exchanges would be governed by the rules of the World Customs Organization, thus re-establishing both customs formalities and commercial measures applicable to movements.

Similarly, in the tax field, the absence of an agreement would mean the elimination of all the simplifications provided for as regards VAT and manufacturing excise duties applicable to the Member States.

"At the moment, the most important thing is to ring-fence the single market," said Jochen Müller, for which he opted to maintain the agreement adopted, contemplating the transition period, with the aim of protecting the citizen, avoiding the interim single market and ensuring peace in Ireland.

During these years, said the representative of the European Commission, some companies have taken the decision not to invest in the United Kingdom and the consequences could be more drastic with a non-agreement. However, he said, "in the EU we are prepared", while appealing to wisdom and was optimistic that in a few years there can be a close commercial relationship.

For his part, Ignacio Aparicio explained that a high percentage of companies from all sectors do not have an established plan to deal with Brexit and reminded that it affects all cross-border services, logistics and supplies that will have to adapt to the new situation marked by changes in VAT, customs, contracts, employment coverage, etc..

The British lawyer lamented the uncertainty that the political situation is creating for companies and the economy in the United Kingdom and in Europe, discouraging new investments. He also indicated that British companies, mainly the smaller ones, are not prepared to face exit from the EU.

Regarding the corporate dimension of companies, Gonzalo Cerón considered that an agreement would allow business to continue as it has been until now, given that most agreements, mergers, restructurings, insolvencies, etc. currently have an international dimension and involve applying international regulations and those specific to each country.

For her part, Belén Palao referred to the customs and indirect tax implications of leaving the United Kingdom, which will need to approve reciprocity agreements with each of the EU countries and will apply new specific controls, agricultural, phytosanitary, chemical ... which involve a considerable increase in the costs that a company allocates for the circulation of its goods and services.

Thus, she urged companies to develop a working scheme that allows, on the one hand, to assess the administrative cost associated with all the changes to be implemented in terms of declarations, control and management of these movements and, on the other, the customs and tax cost resulting from the introduction of borders and the impossibility, in certain cases, of recovering VAT on imports, forcing the content of contracts to be reviewed in order to reduce the fiscal impact.

In this vein, the head of Customs of ITP Aero analysed the plans adopted by his company before the Brexit and explained that customs and controls, in addition to the increased cost in the export and import of products, will lead to delays in the transport of products. He also referred to the need to review the origin of materials and products used by the company when selling to the United Kingdom or third countries, because the regulations may vary from those of the EU.

Finally, Jaime Olleros stressed the importance of the day at a time like the present, the legal consequences, from the tax, customs and corporate, which may result from the departure of the United Kingdom from the EU and Andersen's involvement in issues of international significance. José Vicente Morote, for his part, said that the event was part of a series of conferences on Brexit that the firm is holding in Europe.

 

You can see more information about the consequences of Brexit here

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