Brexit From An Irish Perspective

February 2019

In the wake of Brexit, Ireland will remain a core member of the EU single market and Euro currency. Ireland is the only English-speaking country in the Eurozone. Proportionally Ireland has the 3rd highest international workforce in Europe. Today, 15% of Ireland’s workforce is international.

Brexit and Customs Implications

Once Brexit occurs and Britain leaves the EU, it will be classed as a “third country” outside the single market. It doesn’t matter what kind of customs union is in place, or whether there is a free-trade agreement in place. After Brexit full customs declarations will be required for all goods imports and exports shipped between Europe (including Ireland) and the UK.

As a “third country” goods imported from the UK will require a customs declaration and be subject to controls. Checks by customs officers may be subject to licence requirements and will, generally, be subject to payment of duties and VAT when, and where, they are brought into Ireland and the EU.

Brexit Impacts for the Technology sector

Currently all EU-based organisations and start-ups have access to the EU Digital Single Market (DSM). It aims to improve access to digital goods and services, enhance digital networks and harness digital for economic growth in Europe. GDPR legislation introduced in 2018 is designed to strengthen and unify personal data protection for individuals across the EU. The UK may not be bound to this post March 2019, in a hard-Brexit scenario and the transfer of data at that time will be considered an “international transfer” which will cause a regulatory divergence and may be a concern for customers in the EU.

Other Key Brexit impacts for the sector include:

1.Weak Sterling - Currency fluctuations may mean that companies are less competitive than other companies located in the UK.
2. Moving jurisdiction – Following Brexit, firms may not be guaranteed the same legal protections they enjoyed during the UK’s membership of the EU.
3.New Trade barriers – Any new tariff or non-tariff barriers introduced as part of a new EU-UK trading relationship could significantly increase the cost of Irish technology exports in the UK market.

Impact of a no-deal Brexit scenario

In the absence of a Brexit deal, services traded between Ireland or the EU and the UK will be governed by the General Agreement on Trade in Services (GATS). This was agreed under the guise of the World Trade Organisation (WTO). The WTO is an international organisation dealing with the global rules of trade between its members regarding goods and services. The global trading system is supported by a number of WTO agreements (e.g. GATS and the General Agreement on Tariffs and Trade (GATT).

Trade under GATS and GATT operates under the most favoured nation principle where a member cannot normally discriminate between their trading partners (e.g. in a no-deal Brexit scenario, the UK would need to treat EU and US service providers essentially the same). It also operates under the national treatment principle. In this case, if there was a no-deal Brexit scenario, the UK must treat imported and local services essentially the same).

Brexit and VAT implications

The UK has said that in the event of a no-deal Brexit it will introduce the postponed method of accounting, which will mean that VAT will not arise immediately on imports. Lobby groups have asked the Irish government to implement the same measure regardless of whether there is a deal or not, as VAT will be a new immediate cost for traders who import from the UK.

No deal Brexit guidance

The UK government has provided no-deal guidance on the following website called https://www.gov.uk/government/brexit while the European Commission has released no-deal notices http://europa.eu/rapid/press-release_IP-18-6851_en.htm which is warning all Member States to get their borders ready to implement customs checks on goods coming from the UK from the 29 March 2019.