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Brexit

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(Last updated: 03 February 2020) 

On 23 June 2016 the United Kingdom voted in a referendum to leave the European Union.

Article 50 of the Treaty on European Union contains special provisions for the withdrawal of a Member State. These require a Member State which decides to leave to inform the European Council of its intention. The Treaties will cease to apply as of the date on which a withdrawal agreement takes effect or two years after withdrawal notification unless the European Council unanimously resolves to extend the deadline by mutual agreement with the Member State concerned.

For a long time, the withdrawal agreement negotiated between the EU and the UK was not adopted by the British Parliament, could not come into force and thus the withdrawal deadline was extended on several occasions. 

Only after an early general election in December 2019 which the Conservative Party led by Boris Johnson won with a clear majority was the withdrawal agreement ratified by the UK parliament.

The United Kingdom left the EU on midnight of 31 January 2020, CET.

In accordance with the withdrawal agreement the UK will continue to have access to the single market and still be part of the customs union during the transition period until 31 December 2020. The continued application of EU law in the United Kingdom during this period is implemented inter alia by the European Union Withdrawal Agreement Act 2020. The German legislature has adopted the Brexit Transition Act in which it is confirmed that German federal laws relating to membership of the EU will also continue to apply to the United Kingdom during the transition period. 

The intention is to negotiate and ratify a free trade agreement between the UK and the EU before the transition period expires. There is not much time until the transition period expires on 31 December 2020. Although the withdrawal agreement does include a provision regulating the option of an extension to the transition period to be adopted jointly by the EU and the UK, this option was ruled out by the UK in the European Union Withdrawal Agreement Act 2020. Therefore, if 31 December 2020 remains unchanged as the end of the transition phase and the parties involved do not manage to agree a free trade agreement by then, the withdrawal agreement and its regulations will only cover a few areas. Many points remain unregulated. We offer you comprehensive advice on the withdrawal of the UK from the EU in all legal areas concerned. Please contact us with your questions so that we can work out the best solutions for you.

30/01/2020
Brexit - the count­down to cus­toms and bor­der con­trols
The date has been post­poned on sev­er­al oc­ca­sions but now the day is here. The United King­dom will leave the EU on mid­night (CET) on 31 Janu­ary 2020.Trans­ition peri­odThe trans­ition peri­od be­gins there­after. This fixed peri­od agreed in the With­draw­al Agree­ment will last un­til 31 Decem­ber 2020. Al­though the UK is no longer an EU Mem­ber State and thus loses its vot­ing right in EU bod­ies it will how­ever con­tin­ue to be treated as a Mem­ber State by the EU dur­ing the trans­ition peri­od. All EU law, with the ex­cep­tion of the pro­vi­sions which were not bind­ing even be­fore with­draw­al, will con­tin­ue to ap­ply to and in the UK.In the United King­dom the con­tin­ued ap­plic­a­tion of EU law is trans­posed inter alia by the European Uni­on With­draw­al Agree­ment Act 2020. For ex­ample the Ger­man le­gis­lat­or has ad­op­ted the Brexit Trans­ition Act in which it is con­firmed that Ger­man fed­er­al laws which are linked to the status as a Mem­ber State will also con­tin­ue to ap­ply to the United King­dom dur­ing the trans­ition peri­od. The oth­er EU Mem­ber States must also take such meas­ures in or­der to en­sure that the United King­dom and its cit­izens will be treated just as they were in the past.Ex­ten­sion of trans­ition peri­od? The With­draw­al Agree­ment provides the op­tion of an ex­ten­sion to the trans­ition peri­od to be ad­op­ted by joint de­cision of the EU and the United King­dom. This de­cision would have to be ad­op­ted be­fore 1 Ju­ly 2020. The European Uni­on With­draw­al Agree­ment Act 2020 pre­vents the re­spons­ible Brit­ish min­is­ter from ap­ply­ing to the EU for an ex­ten­sion to the trans­ition peri­od. Even if the rel­ev­ant pro­vi­sion can still be amended at short no­tice busi­nesses should be pre­pared for the trans­ition peri­od end­ing at mid­night on 31 Decem­ber 2020. By this date the free-trade agree­ment between the United King­dom and the EU will also have been con­cluded. Free-trade agree­ment and cus­toms bor­der from 1 Janu­ary 2021 The polit­ic­al de­clar­a­tion agreed between the UK and the EU in ad­di­tion to the With­draw­al Agree­ment sets out the dir­ec­tion of travel for fu­ture re­la­tion­ships between the EU and the United King­dom. The fo­cus will be on a "com­pre­hens­ive and bal­anced free-trade agree­ment". In the pre­vi­ous ver­sion ne­go­ti­ated by Theresa May a free trade area was sought between the EU and the United King­dom. The change made on the ini­ti­at­ive of the Brit­ish gov­ern­ment is sig­ni­fic­ant: Al­though the ob­ject­ive is a free-trade agree­ment with no tar­iffs, or charges or quant­it­at­ive re­stric­tions across all sec­tors for trad­ing goods, a cus­toms bor­der will be erec­ted between the EU and the UK. The polit­ic­al de­clar­a­tion fore­sees the need for ap­pro­pri­ate, ac­com­pa­ny­ing rules of ori­gin and am­bi­tious cus­toms agree­ments to be ne­go­ti­ated. However, the ne­go­ti­at­ors are fa­cing ma­jor chal­lenges.Thus, busi­nesses must ex­pect, when im­port­ing and ex­port­ing goods from and in­to the United King­dom that there will be a cus­toms bor­der between the EU and the UK on 1 Janu­ary 2021. Al­though agree­ment may be reached to keep tar­iffs on some or all cat­egor­ies of goods at 0% this will neither re­move the need for cus­toms de­clar­a­tions nor avoid the pos­sib­il­ity of checks at the bor­der for de­liv­er­ies from Ger­many to the UK. An ap­pro­pri­ate in­fra­struc­ture will be re­quired for this pur­pose. For ex­ample U.K.'s com­pu­ter­ised cus­toms de­clar­a­tion soft­ware will re­quire an up­grade in or­der to be able to handle the volume of de­clar­a­tions to be ex­pec­ted, and wheth­er this can be done in time is a mat­ter for con­cern.Fin­an­cial ser­vices, data trans­mis­sion and the free move­ment of work­ers Giv­en the lim­ited time avail­able, it is as­sumed that the em­phas­is of the free-trade agree­ment will be on the trad­ing goods sec­tor so that the UK will be a third-coun­try state  pos­sibly from 2021 with re­gard to ser­vices. In the polit­ic­al de­clar­a­tion on fu­ture re­la­tions between the EU and the UK re­gard­ing the fin­an­cial ser­vices sec­tor it was an­nounced that a cor­res­pond­ing frame­work for equi­val­ence de­cisions is to be drawn up as soon as pos­sible. Also, re­gard­ing data pro­tec­tion, the EU will need to make an ad­equacy de­cision dur­ing the trans­ition peri­od in or­der to fa­cil­it­ate fur­ther data trans­mis­sion between the EU and the UK. However, in many oth­er sec­tors the reg­u­lat­ory en­vir­on­ment could change sig­ni­fic­antly. The end of the trans­ition peri­od will also her­ald an end to the free move­ment of EU cit­izens as work­ers in the UK and of cit­izens of the UK in the EU. Work­ers from EU Mem­ber States who have not yet lived in the UK and are to be de­ployed there for a sig­ni­fic­ant peri­od of time from the be­gin­ning of next year will re­quire a per­mit. By con­trast, EU cit­izens who ar­rive be­fore the end of the trans­ition peri­od will be able to make use of the pre-settled status un­der the EU set­tle­ment scheme. This is one area where busi­nesses may con­sider wheth­er it makes com­mer­cial sense to de­ploy staff to the UK be­fore the end of 2020. Al­though the UK gov­ern­ment does want to in­tro­duce a new im­mig­ra­tion sys­tem this is only one of many areas to be ad­dressed.Our Brexit Of­fer Your com­pany is also af­fected by Brexit? Our Brexit team would be pleased to ad­vise you on the im­plic­a­tions of leav­ing the EU. A list of our Brexit spe­cial­ists can be found here.For fur­ther in­form­a­tion and our Brexit check­lists please see our Brexit web­site. These will provide you with a good ini­tial over­view of the most im­port­ant im­plic­a­tions in the dif­fer­ent leg­al areas after the trans­ition peri­od has ex­pired. Please also have a look at our blog on our Brexit top­ic page.Do feel free to con­tact our law­yers on our Brexit hot­line at any time: +49 711 9764 930.

Timeline: Brexit and other Events relevant to the European Union in this context

Brexit Timeline

Please find below a summary of the possible legal consequences of the UK's with-drawal from the EU, arranged according to areas of law. If you require any further information please feel free to contact John Hammond at any time.

If you have any questions regarding the UK's withdrawal from the EU and its consequences, you can call our lawyers on the Brexit Hotline at any time: +49 711 9764 930.

Brexit Hotline

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30/01/2020
Brexit - the count­down to cus­toms and bor­der con­trols
The date has been post­poned on sev­er­al oc­ca­sions but now the day is here. The United King­dom will leave the EU on mid­night (CET) on 31 Janu­ary 2020. The trans­ition peri­od be­gins there­after. This fixed peri­od agreed in the With­draw­al Agree­ment will last un
28 February 2020
UK/EU fin­an­cial ser­vices after Brexit -cross bor­der reg­u­la­tion after the...
On 25 Feb­ru­ary, the Coun­cil of the EU pub­lished the fi­nal ver­sion of its ne­go­ti­at­ing man­date and, two days later, the UK gov­ern­ment set out its ap­proach to our fu­ture re­la­tion­ship with the EU. Ne­go­ti­ations...
21 August 2019
CMS - Fo­cus­ing on Funds – Lux­em­bourg Brexit
15 November 2019
Brexit and data pro­tec­tion: what to do next (when you don’t know what’s...
Whilst the threat of a no-deal Brexit has been aver­ted for now, the fu­ture is by no means cer­tain. We have high­lighted some of the key is­sues for UK-based or­gan­isa­tions, and the EEA or­gan­isa­tions that...
14 August 2019
The ins and outs of Brexit – em­ploy­ment and tax as­pects
27 September 2019
Fin­an­cial as­sist­ance to Mem­ber States and European un­der­tak­ings in the...
Brexit without an agree­ment would have im­port­ant con­sequences for the eco­nomy, the la­bour mar­ket and pub­lic fin­ances in the Mem­ber States that have par­tic­u­larly close trade and fin­an­cial re­la­tions with...
01/11/2016
Brexit vote dampens deal­mak­ing ex­pect­a­tions, ac­cord­ing to sur­vey by CMS...
Deal­mak­ing ap­pet­ite in Europe has been over­shad­owed by the UK’s de­cision to leave the European Uni­on, ac­cord­ing to the fourth edi­tion of the European M&A Out­look, pub­lished by CMS in as­so­ci­ation with Mer­ger­mar­ket...
12 September 2019
UK food and cos­met­ic pro­du­cers to the EU to face new reg­u­la­tions after...
As Brexit draws near­er and with the like­li­hood of an un­reg­u­lated exit still not off the table, EU-27 com­pan­ies im­port­ing or selling food or cos­met­ics from Great Bri­tain face li­ab­il­ity risks if they con­tin­ue...
27/10/2016
Private equity pan­el 2016 III sur­vey by CMS and FIN­ANCE: Ger­man private...
The Ger­man private equity mar­ket re­mains sup­port­ive for in­vestors in this seg­ment, des­pite the shock Brexit vote at the end of June. Neither ac­cess to cred­it nor new in­vest­ments, exits or fund rais­ing ap­pear to have been ad­versely af­fected by the Brit­ish
19 August 2019
The ins and outs of Brexit – em­ploy­ment and tax as­pects
As the Brexit pro­cess ap­proaches its ex­ten­ded 31 Oc­to­ber 2019 dead­line, UK and EU com­pan­ies and their em­ploy­ees are fo­cus­ing on the key em­ploy­ment law and tax ques­tions that will shape busi­ness and the...
29 May 2019
Brexit: don't for­get to ne­go­ti­ate the dis­pute res­ol­u­tion clause!
The post­pone­ment of Brexit pro­longs the sus­pense con­cern­ing the fu­ture co­oper­a­tion between the European Uni­on (EU) and the United King­dom (UK). Un­cer­tainty re­gard­ing re­cog­ni­tion and en­force­ment of judg­ments...
14 March 2019
What about VAT after Brexit?
Al­though the UK par­lia­ment ruled against the pos­sib­il­ity of a ‘no deal’ Brexit, the out­come of the cur­rent UK polit­ic­al con­tro­versy re­mains un­cer­tain. Both busi­nesses and gov­ern­ments in both Great...