The objective of Finland and the EU is to negotiate and conclude a withdrawal agreement that guarantees an orderly withdrawal of the UK from the EU, and to have that agreement enter into force by 30 March 2019. If the agreement does not enter into force by the said date and if the two-year negotiation period is not extended by a unanimous decision of the European Council upon the UK’s request, the outcome is a withdrawal without an agreement. In this scenario, EU treaties and legal acts would cease to apply to the UK immediately.
Impact of a ‘no-deal Brexit’
Steps are being taken at national and EU level to prepare for the financial services impact of a ‘no-deal Brexit’ scenario, where the United Kingdom would exit the European Union without a withdrawal agreement.
The European Commission’s Contingency Action Plan sets out temporary equivalence decisions on central counterparty services, central securities depositories and derivatives contracts and the clearing of derivatives. Through legislative measures the aim is to safeguard financial stability and secure the continuity of financial services activities in the EU.
In Finland, a legislative proposal on investment services provision is currently before Parliament. According to the proposal, third-country firms could, under certain conditions, continue to provide investment services in Finland to professional clients without having to set up a branch. The firm would be required to apply to the Financial Supervisory Authority for an operating licence through a fairly simple process. In the statement of reasons accompanying the legislative proposal, reference is made to the possible problems of interpretation that may arise in securing the continuity of over-the-counter derivatives contracts if an operating licence is not applied for. In such cases the Financial Supervisory Authority could issue an interpretation decision on whether or not the business activities in question require an operating licence.
Businesses in the financial services sector should make preparations for a no-deal Brexit, and should seek to identify the consequences of such a scenario for their own business.
Government proposal before Parliament (in Finnish, Parliament of Finland website)
Businesses: The UK’s exit from the EU will bring changes to cross-border trade, for example. Find out whether Brexit affects your company’s taxation and what measures or changes may be needed. Study the procedures and rules that apply to trading with non-EU countries.
Individuals: Brexit has no direct impact on individual taxpayers’ income tax.
Businesses: Brexit is a particularly significant challenge for businesses that only trade within the Single Market without borders. Businesses that are going to trade with the UK in the future will need to engage in customs clearance procedures which are mandatory in trade with third countries. The businesses have to acquaint themselves with these matters and obtain information about what trading with non-EU countries requires and what requirements third country products must meet before they can be imported to the intra-EU market.
Individuals:When you order goods online, you should be prepared that orders made from the UK will be cleared through Customs and taxed in the same way as online purchases from non-EU countries such as China or the USA.
Questions and Answers – the rights of EU and UK citizens (European Commission)
Martti Salmi, Senior Ministerial Adviser, tel. +358 400 510 304, martti.salmi(at)vm.fi