Brexit Deal brings welcome news for Business in Ireland
Update: After this article was posted the Brexit Deal was not passed through the UK House of Commons and Brexit was delayed until the 29th January 2019. The Brexit Transition Period has now commenced and trade with the UK will remain unchanged until 31st December 2020.
More than three years after the UK voted to leave the EU, a Brexit deal was reached on the 17th of October bringing welcome news for Business in Ireland both north and south of the border. If the UK Parliament approves the terms the Brexit deal is possible it be met by the deadline on the 31st of October.
This Brexit deal declares that there will be no hard border on the island of Ireland separating Northern Ireland and the Republic of Ireland. This key issue was the major backstop in reaching a withdrawal agreement between the UK and the EU, as both sides declared in December 2017 that a deal could not contain a hard border. This is the issue that former British prime minister, Theresa May tried to solve but her deals were denied three times by the House of Commons, ultimately forcing her to resign. Her successor Boris Johnson has attempted another route that has proven successful.
No Hard Border
A new deal has been negotiated, with no customs border on the island of Ireland bringing much relief to citizens and businesses in Ireland. In the new deal Northern Ireland will remain in the UK customs union after Brexit but it will be subject to EU customs rules and overseen by EU authorities. Additionally, the Irish Sea will form a regulatory border for goods in order to avoid a hard border in Ireland. Controls, regulatory checks, and customs checks will now take place at ports on the Irish Sea when moving goods between Britain and Northern Ireland.
Of course, this arrangement comes with some complications. According to the deal, the UK would collect tariffs for the EU on any goods that are imported into Northern Ireland. Businesses and traders in Northern Ireland would be permitted to claim partial tariff refunds only when the goods remain in the North or are returned to the UK. Additionally, Northern Ireland businesses are set to benefit from any future trade deals between the UK and other countries post-Brexit. This is expected to serve as a positive incentive for business in Ireland both north and south of the border.
Does this Brexit Deal solve the Irish border issue?
The new arrangements would come into effect for four years from the end of the transition period on 31st December 2020. After this period has passed Northern Ireland can hold a parliamentary vote to ‘opt-out’ of this arrangement. The UK is required to provide an opportunity for the first vote within two months of the end of the initial period, meaning the vote would have to take place before 31st December 2024.
If Northern Ireland vote to opt-out of these arrangements, a two-year cooling-off period will commence. A joint committee representing the EU and UK will then need to find another option that way of meets the conditions of the 1998 Belfast Agreement and does not result in a hard border in Ireland.
Will the deal affect VAT?
The trade deal agrees that EU law will apply on VAT excised in Northern Ireland and the UK will be responsible for collecting the VAT and excise duties. The UK may apply VAT exemptions and reduced rates for goods moving across the Irish land border. This aspect of VAT needed to be aligned between north and south so to avoid possible complications around smuggling which could jeopardise the integrity of the EU single market.
Does this deal mean that the UK will now exit the EU?
The answer to this question is currently unknown. The Brexit deal must now be ratified by the UK House of Commons and that will depend on whether Johnson receives enough votes to pass the deal. If the House of Commons doesn’t support the deal, Johnson could be back where he started facing a no-deal situation.
Register a Business in Ireland
Please be advised that to register a business in Ireland you will need to specify between Northern Ireland (UK registered company) and the Republic of Ireland (Irish registered company). If you would like more information on setting up a business in Ireland on either side of the border as part of your Brexit strategy, please don’t hesitate to contact the experts at RegisterACompanyinIreland click here.