How will Irish Businesses with UK ownership be affected by the Brexit Transition Period
Company Bureau Formations
17 February, 2020
After many delays and setbacks, Brexit went ahead on January 31, 2020. The UK has entered a Brexit transition period which will last until the end of 2020. The transition will allow time for a new relationship agreement to be negotiated between the UK and the EU. This comes as good news to businesses in both the UK and Ireland as it will provide time for businesses to adapt for when a deal is met.
Revenue Bond Requirement
The UK-EU Withdrawal Agreement sets out the agreed terms during the transition period which will end on December 31, 2020. Irish businesses with UK only resident directors can continue to trade without securing a Section 137 Revenue Bond. However, those companies will need to make a key arrangement before the end of 2020. Under the Companies Act 2014, Irish companies are required to appoint at least one director who is a resident in the European Economic Area (EEA) or they will need to purchase a Revenue Bond. There is also another option to prove a 'Real and Continuous Link' to the state, however, this option is often difficult to achieve as the company must have several Irish-based employees and obtain approval by the Revenue Commissioner.
Brexit Transition Period
Although the UK is currently no longer an EU member it will continue to operate under the EU's rules until the transition period ends on December 31, 2020. The trading relationship between the UK and EU member states will also remain unchanged because the UK will remain within the EU single market and customs union during the transition. The UK will also continue to follow current EU law and any future rulings that the European Court make. However, it should be noted that UK ministers will not be permitted to attend or vote at European Council meetings.
For businesses and citizens, the following aspects will remain unchanged during the Brexit transition period:
- Cross Border Trade - EU member states are to continue to treat the UK as if it were an EU member, this means there will be no additional checks or custom duties introduced between the UK and EU.
- Freedom of Movement - UK citizens can continue to work and travel within the EU, with no requirement to obtain work or travel visas. EU citizens also have this same access to the UK
- Security and Co-operation - The UK and the EU will continue to follow the security cooperation agreements
Currently, the post-Brexit relationship between the UK and EU is largely unknown. Businesses and citizen within the island of Ireland expect special protocols to be introduced between Northern Ireland (part of the UK) and the Republic of Ireland (part of the EU). There has been speculation that goods crossing into Northern Ireland by land would adhere to the EU rules regarding customs, checks and VAT. It is clear that the UK and Ireland will require a customized trade solution to benefit businesses on both sides of the border.
For more information about setting up a company in Ireland or adhering to company regulations post-Brexit please contact the experts at Company Bureau.
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