As of 1 February 2020, the United Kingdom (UK) is no longer a member of the European Union (EU). The agreed transition period ended on 31 December 2020. The EU and the UK concluded a comprehensive Trade and Cooperation Agreement on 24 December 2020, opening a new chapter in EU-UK relations. The agreement was reached after less than a year of intensive negotiations, during which time the EU and the UK fundamentally reshaped their future relationship.
The Trade and Cooperation Agreement that was negotiated between the EU and the UK provisionally entered into force on 1 January 2021 after all 27 Member States approved the agreement and its provisional application. On 27 April 2021, the European Parliament also approved the agreement, with the result that the agreement entered into force on a permanent basis on 1 May 2021. The agreement creates a new basis for UK-EU relations. Never before has the EU negotiated such a comprehensive agreement with a third country in such a short time.
The German government prepared carefully for the changes in its relationship with the UK. At the EU level, it is and will remain in very close contact with the European Commission and the other member states. At the national level, it is liaising closely with all stakeholders, including businesses, industry associations and private citizens.
On 9 July 2020, the European Commission adopted a “readiness” communication on the changes that were happening regardless of the outcome of the negotiations. In addition, sector-specific readiness notices (e.g. on customs, VAT, excise duties, banking and payment services) were issued to help administrations, businesses and EU citizens adapt to the changes in the relationship with the UK.
The European Commission’s dedicated page contains all the information you need about the background and progress of the negotiations, the Withdrawal Agreement, and the Trade and Cooperation Agreement.
Among other things, the Trade and Cooperation Agreement creates a broad economic partnership. In essence, this is based on a free trade agreement which contains neither tariffs nor quotas and thus averts any major trade barriers. Such a partnership also needs fair parameters, however. For that reason, the two sides have agreed on far-reaching provisions in order to guarantee fair competition. This concerns the sphere of state aid and standards of protection for consumers, labour, the environment and the climate.
However, there could not be a genuine economic partnership if the future relationship did not go beyond trade issues. The EU and the UK have therefore also agreed on the framework for future cooperation in many other spheres: services; professional qualifications; public procurement; environmental and energy issues; air, sea and rail freight transport; as well as provisions on social security and research and development. Under the agreement, the UK will continue to participate in a whole series of EU programmes.
Details on the – currently provisional – rules that have been in place since 1 January 2021 can be found on the websites of the various federal ministries and the European Commission.
Our dedicated Brexit page includes important Brexit-related information for the areas of financial markets, customs, budgetary issues and taxation.
On 29 March 2017, the UK informed the EU of its intention to withdraw from the Union. On 17 October 2019, the heads of state and government of the EU27 agreed to the renegotiated Withdrawal Agreement, containing changes to the Northern Ireland Protocol, and the renegotiated Political Declaration. The agreement was passed by the British parliament on 9 January 2020 and the European Parliament on 29 January 2020. On 31 January 2020, the Council of the European Union concluded the agreement, which then entered into force on 1 February 2020. Since then, the UK has had the status of a third country.
The UK has no longer had a say in the EU institutions since 1 February 2020, the day after the UK’s withdrawal. Since that date, UK citizens are no longer able to participate in European citizens’ initiatives, and they no longer have the right to vote or stand in European elections. UK citizens living in the EU can no longer vote or stand in local elections.
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 is nearly 600 pages long and sets out the modalities of 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 the Republic of Ireland and Northern Ireland and, with it, the hard-won peace achieved over 20 years ago. In line with the European Council’s guidelines, the European Court of Justice plays an important role in monitoring and implementing the Withdrawal Agreement. Future UK-EU relations were negotiated during the transition period. The basis for this was the Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom. The negotiations between the EU and the UK continued after March 2020, despite the difficult conditions created by the Covid-19 pandemic. In these negotiations, the European Commission coordinated closely with the 27 EU member states and with the European Parliament. Both sides stepped up the pace of the negotiations, enabling an agreement to be reached on 24 December 2020.
The purpose of the Northern Ireland Protocol, which was concluded together with the Withdrawal Agreement, is to safeguard the 1998 Good Friday Agreement. Customs checks on the border between the Republic of Ireland and Northern Ireland must be avoided. For this reason, two parallel customs systems have applied in Northern Ireland as of 1 January 2021: Northern Ireland is part of the UK’s customs territory, but is treated as if it were part of the EU’s customs territory if goods from outside the EU are brought into the EU via Northern Ireland. The dynamic application of EU internal market rules with regard to goods in Northern Ireland also protects the integrity of the single market.
The EU and the UK regularly discuss the implementation of the Withdrawal Agreement in a Joint Committee. The two co-chairs of the Joint Committee – European Commission Vice-President Maroš Šefčovič and UK Minister for the Cabinet Office Michael Gove – were able to reach a broad agreement on the previously unresolved issues on 8 December 2020.
In preparation for Brexit, Germany adopted the Tax Act Relating to Brexit (Brexit-Steuerbegleitgesetz) on 25 March 2019. It contains provisions within the Federal Finance Ministry’s area of responsibility that are necessary in connection with the UK’s withdrawal from the EU. The Act’s tax provisions are intended to prevent legal disadvantages from arising solely as a result of Brexit for taxpayers who have completed all essential tax-relevant actions prior to Brexit (“Brexit as a detrimental event”). Further information can be found in the Tax Act Relating to Brexit (Brexit-Steuerbegleitgesetz).
Since 1 February 2020, Brexit has been a reality: the UK is no longer a member of the EU. Initially nothing changed for citizens and businesses. The Withdrawal Agreement provided for a transition period until 31 December 2020, during which time EU law essentially continued to apply to the UK. The UK also remained part of the European single market and the customs union during this period. The Withdrawal Agreement also created legal certainty in important areas for the time after the transition period, from 1 January 2021.
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 are no controls at the border between the Republic of Ireland and Northern Ireland and that the Good Friday Agreement remains fully in force. The Protocol provides that Northern Ireland is part of the UK’s customs territory, but that all relevant EU single market rules and the Union Customs Code apply in Northern Ireland if goods are brought into the EU via Northern Ireland. The checks and collection of customs duties this entails take place at the entry points to the island of Ireland in Northern Ireland.
The UK’s financial obligations towards the EU are also laid down in the Withdrawal Agreement.
Among other things, the Trade and Cooperation Agreement creates a broad economic partnership. In essence, this is based on a free trade agreement which contains neither tariffs nor quotas and thus averts any major trade barriers.
Such a partnership needs fair parameters. For that reason, the two sides have agreed on far-reaching provisions in order to guarantee fair competition. This concerns the sphere of state aid and standards of protection for consumers, labour, the environment and the climate. However, there could not be a genuine economic partnership if the future relationship did not go beyond trade issues. The EU and the UK have therefore also agreed on the framework for future cooperation in many other spheres: services, professional qualifications, public procurement, environmental and energy issues, freight transport by air, sea and rail as well as provisions on social security and research and development. Under the agreement, the UK will continue to participate in a whole series of EU programmes.
In light of the close links between the EU and the UK and their geographical proximity, the agreement also establishes a close security partnership. This will facilitate future cooperation on justice and home affairs. In concrete terms, this means that both sides will continue to work together closely on fighting crime, for instance within the context of Europol, and will cooperate on combating money laundering, transnational crime and terrorism. In addition, the agreement regulates the mutual exchange of data, for example airline passenger data and criminal records. All of this will be done in compliance with the EU’s General Data Protection Regulation (GDPR) and the European Convention on Human Rights.
General Brexit information
The European Commission has a dedicated website answering the most important general questions relating to the Withdrawal Agreement, including:
- What is included in the Common Provisions of the Withdrawal Agreement?
- What has been agreed on citizens’ rights?
- What has been agreed on the governance of the Withdrawal Agreement?
- What has been agreed regarding the financial settlement?
- Protocol on Ireland/Northern Ireland
On a different website, the European Commission provides detailed answers to numerous questions on the Trade and Cooperation Agreement, including:
- Provisional application and ratification process
- Do national parliaments play a role in the ratification process?
- What changes will occur on 1 January 2021 in the areas of trade in goods and services and investment?
- How ambitious is the Free Trade Agreement?
- What new customs checks and formalities will apply between the EU and the UK?
- What about trade between Great Britain and Northern Ireland?
- Does the Agreement cover financial services?
- What happens if one side unilaterally distorts the level playing field?
- How will you ensure that taxation isn’t used as a means to distort competition?
- Will the EU and the UK cooperate on anti-money laundering?
- The UK’s participation in EU programmes
- What body will supervise the implementation of the draft Trade and Cooperation Agreement?
The European Commission’s Taxation and Customs Union Directorate General has put together a page answering the 50 most frequently asked questions about the impact of the UK’s withdrawal on the single market and the customs union.
Within the German government, the Federal Foreign Office is the lead ministry on Brexit. Its dedicated Brexit page provides an overview of the most important Brexit issues.
More specific Brexit information
The following websites provide more detailed information about Brexit:
- On its website, the Federal Financial Supervisory Authority (BaFin) provides information about Brexit for companies operating in the area of financial services. This includes information about approval procedures, internal risk models and outsourcing, as well as responses to frequently asked questions.
- The Bundesbank has set up an area of its website dedicated to prudential supervision, which includes information for banks that are considering relocating or expanding their operations (“incoming banks”) as a result of Brexit. A hotline has also been set up for affected banks.
- The customs administration’s website offers information about Brexit and matters related to customs and excise duty legislation.
- The website of the Federal Ministry of the Interior and Community features FAQs on the consequences of Brexit for the rights of British citizens (in German).
- The Federal Ministry for Economic Affairs and Climate Action has comprehensive Brexit-related information for businesses on its website. It has also set up a Brexit information line that citizens and companies can call if they have any questions or concerns.
- Germany Trade & Invest (GTAI) provides regular updates and background information on Brexit, including information for all those involved in trade between Germany and the UK (in German).
- The German-British Chamber of Industry and Commerce, which is funded by the Federal Ministry for Economic Affairs and Climate Action, offers information about the impact of Brexit on German companies.
- The federal government’s family benefits portal offers information about family benefits post-Brexit.
- In the area of financial services, numerous business associations offer comprehensive information related to their respective sectors, e.g. banking and insurance.