Since 1 February 2020, Brexit has been a reality: the United Kingdom (UK) is no longer a member of the European Union. The United Kingdom’s withdrawal from the European Union and the end of the agreed transition period on 31 December 2020 will bring far-reaching changes, whatever happens and regardless of whether the EU and the United Kingdom (UK) reach an agreement on their future relations. The European Union is striving to establish a new and comprehensive partnership with the UK, one which is fair for all member states and in the interests of our citizens.
Negotiations on the future relationship between the EU and the UK began in early March 2020. With a negotiating mandate approved by all 27 member states, Michel Barnier is leading negotiations on behalf of the EU. The goal of the negotiations is to conclude a comprehensive agreement on the future of UK-EU relations once the transition period ends on 31 December 2020. It will not be possible to extend the transition period. Such an extension would have required a joint decision by 1 July 2020. The UK let this deadline lapse.
This means that, from 1 January 2021 onwards, the UK will no longer be part of the internal market and the customs union. Even if an agreement on future relations is concluded by the end of 2020, the EU’s relationship to the UK will change fundamentally and will substantially differ from when the UK was a member of the internal market. For example, different customs and tax formalities will be required. The countries, companies and citizens in Germany and the whole EU must prepare for the consequences of the end of the transition period. They must do so regardless of whether or not a deal is struck for a new agreement on the future relationship.
To help with this, the European Commission published a 'Communication on readiness at the end of the transition period' on 9 July 2020. The European Commission is currently reviewing the over 90 sector-specific stakeholder preparedness notices it published during the Article 50 negotiations with the UK and is updating these notices where necessary. The updated readiness notices on individual sectors (including customs, VAT, excise duty, banking and payment services) are designed to help administrations, businesses and EU citizens prepare for the changes that will inevitably set in once the transition period ends, regardless of the outcome of negotiations on future relations.
The EU strives to have a close partnership with the UK in the future, too. We firmly believe that a successful agreement on the basis of the Political Declaration is possible. However, it is important that we prepare for all possible outcomes of the negotiations. This includes preparing for a no-deal scenario. It is particularly important that all stakeholders know about and prepare for all of the changes that will take place on 1 January 2021 regardless of the outcome of the negotiations, since the UK will then be deemed a third country.
The European Commission has published a communication report presenting a package of targeted contingency measures to deal with a no-deal scenario on 1 January 2021.
It is important that businesses and citizens prepare for all possible outcomes of the negotiations. This includes preparations for a no-deal scenario.
Our dedicated Brexit page includes important information on preparations for Brexit in the areas of financial markets, customs, budgetary issues and taxation.
On 29 March 2017, the United Kingdom informed the European Union of its intention to withdraw from the EU. On 25 November 2018, agreement was reached between the heads of state and government of the EU27 and the UK government at a special meeting of the European Council. The agreement between the EU and the UK consists of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community [pdf, 3MB] and the Political declaration setting out the framework for the future relationship between the European Union and the United Kingdom [pdf, 126KB] .
The Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community [pdf, 3MB] is a 585-page document that lays down the arrangements for the UK’s withdrawal from the EU. It includes central issues that are particularly important to the German government. For example, it provides comprehensive protection for the rights of EU citizens living in the UK as well as British citizens living in the EU: they can continue to live, work and study in the UK and in the EU respectively, while also enjoying the benefits of a social security system. It also makes provisions for the UK’s financial obligations. Furthermore, the Withdrawal Agreement safeguards the open border between Ireland and Northern Ireland and, with it, the hard-won peace achieved 20 years ago. In line with the European Council’s guidelines, the European Court of Justice will be given an important role in monitoring and implementing the Withdrawal Agreement. In addition, the Agreement puts in place a transition period until the end of 2020 (renewable once, by a maximum of two years), which will leave time to negotiate the nature of future UK-EU relations. The transition period set out in the Withdrawal Agreement will be used for formal negotiations on post-Brexit UK-EU relations based on the Political Declaration.
The Political declaration setting out the framework for the future relationship between the European Union and the United Kingdom [pdf, 126KB] defines the framework for negotiations on the future relationship between the EU and the UK.
Because the original Withdrawal Agreement failed to win approval in the British parliament three times, the European Council, in agreement with the UK, extended the deadline for withdrawal to 12 April 2019 and then to 31 October 2019.
In September and October 2019, EU and UK negotiators agreed on new wording for the Northern Ireland Protocol (which forms part of the Withdrawal Agreement) and the Political Declaration. On 17 October 2019, the heads of state and government of the EU27 also gave their agreement to the renegotiated Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community [pdf, 3MB] and the renegotiated Political declaration setting out the framework for the future relationship between the European Union and the United Kingdom [pdf, 126KB] . The changes made represent a compromise. In particular, they avoid regulatory or customs checks on the island of Ireland, thus honouring the Good Friday Agreement. In contrast to what was set out originally in the Northern Ireland Protocol (the “backstop”), Northern Ireland will be covered by two regulatory systems: It will remain part of the United Kingdom customs territory while at the same time also being subject to EU customs rules when it comes to goods that subsequently move from Northern Ireland into the EU. The dynamic application of EU internal market rules with regard to goods in Northern Ireland also protects the integrity of the single market.
As of 1 February 2020, Brexit is reality: the United Kingdom is no longer a member of the European Union. Initially nothing will change for citizens and businesses:
- The Withdrawal Agreement provides for a transition period until 31 December 2020, during which time EU law will essentially continue to apply to the UK. The UK will also remain part of the European single market and customs union during this period.
- The EU’s freedom of movement – in other words, the right to live, work, study or have social security coverage in the EU and the UK – continues to apply in full during this period.
- Under the Withdrawal Agreement, the transition period can be extended once, by up to two years. The decision on this must be taken by 1 July 2020. The transition period ensures that individuals and businesses have the planning certainty they need.
The Withdrawal Agreement also creates legal certainty in important areas for the time after the transition period ends, i.e. from 1 January 2021 at the earliest.
- It provides comprehensive protection for the rights of EU citizens living in the UK, as well as British citizens living in the EU, for the lifetimes of the individuals concerned: they can continue to live, work and study in the UK/EU while also enjoying the benefits of a social security system.
- The special arrangement for Northern Ireland guarantees the integrity of the EU single market; at the same time, it ensures that there will be no controls at the border between Ireland and Northern Ireland and that the Good Friday Agreement remains fully in force. The Protocol provides that Northern Ireland will remain part of the UK’s customs territory but that all relevant rules of the EU single market will apply in Northern Ireland, as will the Union Customs Code. The checks and collection of customs duties this entails will take place at the entry points to the island of Ireland in Northern Ireland.
- In addition, the UK’s financial obligations towards the EU are also laid down in the Withdrawal Agreement.
The EU and the UK will make intensive use of the transition period to negotiate their future relations. The EU wants to continue having a close partnership with the UK.
Negotiations on the future relationship between the EU and the UK are expected to begin in early March. Before negotiations can start, the 27 EU member states must agree on a negotiating mandate for the European Commission. Initial discussions on the mandate have already begun, and the Council of the EU is expected to adopt the mandate at the end of February.
The Political Declaration defines the framework for negotiations on the future relationship between the EU and the UK. The Declaration essentially provides for a partnership in the areas of economic and security policy.
General Brexit information
The European Commission answers the most important general questions relating to Brexit on its website:
- What is included in the Common Provisions of the Withdrawal Agreement?
- What has been agreed on citizens’ rights?
- What has been agreed on separation issues?
- What has been agreed on the governance of the Withdrawal Agreement?
- What has been agreed regarding the financial settlement?
- Protocol on Ireland / Northern Ireland
- What has been agreed regarding the Sovereign Base Areas in Cyprus?
Within the German government, the Federal Foreign Office is the lead ministry on Brexit. Its dedicated Brexit page has an overview of the most important Brexit issues.
More specific Brexit information
The following websites provide more detailed information about Brexit and about the preparations that are important to make:
- The German Federal Financial Supervisory Authority (BaFin) answers frequently asked questions on Brexit. The information is particularly relevant for UK banks and insurers that would like to open branches or establish subsidiaries in Germany, as well as providers and issuers of securities
- The Deutsche Bundesbank provides information relating to banking supervision, i.e. for financial institutions that may want to reconsider their location strategy. The Bundesbank has also set up a dedicated phone number for financial institutions affected by Brexit.
- The German customs administration provides Brexit-related information regarding legal repercussions in the context of the enforcement of intellectual property rights and the necessary customs measures.
- The website of the Federal Ministry of the Interior, Building and Community features FAQs on the consequences of Brexit for the rights of British citizens (in German)
- The Federal Ministry for Economic Affairs and Energy has comprehensive Brexit-related information for businesses on its website.
- The German-British Chamber of Industry and Commerce , which is supported by the Federal Ministry of Economic Affairs and Energy, offers an update on the Brexit situation, with links to key information sources.
- The Association of German Chambers of Commerce and Industry ( DIHK ) has developed a “Brexit checklist” tool which allows users to create their personal checklist as a PDF file.
- A number of professional organisations in Germany have given advice regarding the UK's withdrawal and related issues. The Federation of German Industries (BDI) has published extensive information on the consequences of Brexit for business.
- In the area of financial services, many industry associations have prepared comprehensive information relating to their respective sector. For example, the German Insurance Association has published a position paper on future economic relations between the EU and the UK.
- At the European level, the European Central Bank is committed to providing information to banks and interested parties about its supervisory expectations. A dedicated page on relocation to the euro area answers frequently asked questions (FAQs) about the ECB’s role in supervising euro area banks.
- With regard to chemicals legislation, the European Chemicals Agency (ECHA) has published comprehensive information on the impact of Brexit in this area, in particular on the EU's REACH regulation.
- With regard to human medicines, the German licensing authorities (the Federal Institute for Drugs and Medical Devices and the Paul-Ehrlich-Institut ) both provide information on the impact of Brexit on pharmaceutical companies.
- At the European level, the European Medicines Agency (EMA) provides guidance to help pharmaceutical companies responsible for both human and veterinary medicines prepare for the United Kingdom’s withdrawal from the EU.