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Brexit – the trade and co‑operation agreement

Blog post

Anthony Collins Solicitors
Written by
Anthony Collins Solicitors
Published
4th February 2021
Topic
Business planning
Image
EU flag

Anthony Collins Solicitors outline some of the key elements co‑ops should consider the impacts of the Brexit UK‑EU trade and co‑operation agreement which came into place on 31 December 2020.

The agreement confirms how the UK and EU will work together in respect of trade as well as dealing with issues of social security co‑ordination, law enforcement and judicial co‑operation in criminal matters, dispute settlement and safeguards.

Here we highlight the headline issues for you and your co‑operative, which are particularly relevant if you exchange goods, services or information with customers or suppliers within the EU.

Goods

Provided you can evidence that your goods originated in the UK or EU, there will be no tariffs or quotas on goods exchanged between the UK and the EU. Goods that do not meet the ‘rules of origin’ can still be traded but they will not be able to benefit from preference under the agreement and may have to pay the standard (“Most Favoured Nation”) tariffs that the EU and UK apply to imports. For exports to the EU, this will be their Common External Tariff. Likewise, for imports to the UK, this will be the UK Global Tariff.

The UK and EU will operate independent product regulations, standards and conformity assessment procedures going forward and this will give rise to additional barriers to trade. The trade and co-operation agreement seeks to minimise the impact of these trade barriers by promoting cooperation in the automotive, chemical, pharmaceutical, organic products and wine sectors.

Services, travelling for work and procurement

UK nationals no longer have the unlimited right to travel, work and live in the EU. UK tourists and short‑term business visitors may travel to the EU but will need a visa if they wish to stay in the EU for more than 90 days in a 180‑day period.

There is no automatic mutual recognition of professional qualifications so employees engaged in regulated professions must ensure appropriate steps are taken before providing cross-border services, which may include registering with dual professional bodies, changing residence or even re-qualifying.

The framework and principles underlying the public procurement regime (the procurement procedures, financial thresholds, etc.) will not substantially change but contracting authorities will be required to publish public procurement notices for new procurements to the new UK e-notification service, Find a Tender (FTS): www.find-tender.service.gov.uk

Digital services, data and intellectual property

UK co‑operatives (and businesses generally) can no longer use the Mini-One-Stop shop (MOSS) single VAT return with HMRC to report sales of digital services to EU consumers and pay over EU VAT. This will impact any co‑operative which operates in the EU via the cloud or sells services automatically over the internet, such as: consultancy services and virtual training provided online, software supply and digital content (music, videos, ebooks).

Whether selling to a UK or EU customer, you must still charge the VAT rate of their country of residency. You will need to register for VAT in each EU member state where you sell digital services to consumers, noting that the digital services sales threshold (€10,000) will no longer apply. EU businesses must apply for a regular UK VAT number to report on a quarterly basis any sales to UK customers.

The EU route will no longer be possible to protect a trademark or design in the UK, but it will have to be done through a national application to the Intellectual Property Office (IPO) or the Madrid Protocol or the Hague Convention for designs.

The IPO will automatically convert the existing 1.4 million EU trademarks and 700,000 EU designs to comparable UK rights with effect from 1 January 2021. Co‑operatives that have applications for an EU trademark or designs which are ongoing will have a period of nine months from 31 December 2020 to apply in the UK for the same protections. Leaving the EU does not affect the current European patent system and existing European patents covering the UK are also unaffected.

Now that the transition period has ended, the UK is considered a ‘third country’ for the purpose of data protection. Personal data can only be transferred from the European Economic Area (EEA) to a third country when an adequate level of protection is guaranteed and this is known as an ‘adequacy decision’. The UK Government is seeking an adequacy decision from the European Commission but if this is not confirmed and you exchange personal data with contacts in the EEA, you will need to take extra steps to safeguard the flow of information between the UK and EEA. The ICO has helpful guidance and resources for navigating life after Brexit - ico.org.uk/for-organisations/dp-at-the-end-of-the-transition-period/

Next steps

Whilst Brexit has caused significant disruption for cooperatives over the past few years and will continue to do so, there are now at least some certainties which need to be considered. With the agreement of the trade and co‑operation agreement, more helpful information can be found on the Government website: www.gov.uk/transition

If you have concerns about the impact Brexit may have upon your current ways of working, or if you would like to explore some of the opportunities it presents, please contact the Co-operatives UK advice team.

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