Impact of a 'no deal' Brexit on your travel management programme

October Update: Planning for Brexit and your Travel Management Programme

Whilst the coronavirus pandemic has dominated both news headlines and business agendas in 2020, the UK’s fast-approaching deadline to agree terms with the EU means we can soon expect Brexit to return to centre stage.

When the UK left the EU on 31 January 2020 following the ratification of the Withdrawal Agreement by the UK Parliament and the Council of the European Union, it entered into an 11-month transition period. Formal negotiations on the UK’s post-Brexit relationship with the EU have been ongoing since March 2020. However, with less than three months to go until official departure, a ‘no-deal’ scenario remains a possibility. Businesses should be aware of the necessary contingency planning required in the event of a no-deal Brexit at the end of the transition period.  

We have set out below the key areas where our customers’ travel programmes could be impacted in the event of a no-deal Brexit.

 

Border control in the event of a no-deal Brexit after the transition period

At the end of the transition period, UK passport holders may no longer be able to use passport and security queues designated for EEA nationals and may need to verify return/onward tickets, as well as their purpose of travel and that they have enough money for their stay. EEA nationals visiting the UK, on the other hand, will not face new processes for short-term visits lasting less than three months and will continue to have the ability to use e-gates as they do today.

Travel to Ireland will not change. UK nationals will continue to be able to travel and work there in the same way as before.

Visas

The EU has exempted UK nationals from the requirement to hold a short-stay visa (Schengen-visa) for stays of up to 90 days out of any 180-day period in the Schengen area. In reciprocity, EEA nationals visiting the UK for up to three months will not require a visa. In each case, for longer stays, a resident permit or visa is likely to be required.

In the longer term, UK nationals will likely be included in the European Travel Information and Authorisation System (ETIAS), similar to the US ESTA regime. ETIAS will require an electronic travel authority to be issued by the EU prior to a person’s arrival into the Schengen Zone. Each ETIAS granted will be valid for three years, and will cost €7, with applications completed online. The ETIAS is likely to be implemented in late 2022.

Passports

Passport validity periods might also change. UK passport holders are advised to make sure their passports have at least six months’ validity remaining on the date they arrive in the EU and that their passports are less than 10 years old. The UK Government has released an online passport checker, which can be used by customers to check whether their passport will require renewal in the event of no-deal.

Our customers benefit from the expert services of our Travel Essentials team, based in our Chancery Lane office in London. Our in-house specialists provide visa and passport services and advice along with more complex immigration consultations.

Air transport in the event of a no-deal Brexit after the transition period

The UK and EU have agreed a continuation of the “bare bones” agreement previously put in place to maintain point to point aviation connectivity between the EU and UK in the event of a no-deal scenario.

The Department for Transport is the lead UK authority for negotiating bilateral air service agreements involving non-EEA countries. The DfT has already agreed air service agreements with many countries, including the USA and Canada, amongst others.

On safety matters, the UK has continued its membership of the European Air Safety Agency (EASA). In the longer-term, the UK has expressed a desire to agree a Bilateral Aviation Safety Agreement (BASA) with the EU, to minimise regulatory barriers for the aviation industry and maintain high safety outcomes.

Air passenger rights, including compensation payments for delay, will continue to apply.

Rail transport in the event of a no-deal Brexit after the transition period

It’s unlikely that the Eurostar and the Eurotunnel will face barriers to their continued operation. EU law will continue to require that the operators on cross-border services comply with their national regulations, as well as those of the EU. There is no reason that the owners of the Eurostar and the Eurotunnel should cease to comply with these laws.

Rail passenger rights, including compensation payments for delay, will continue to apply.

Driving licences in the event of a no-deal Brexit after the transition period

After the transition period, UK driving licences might not be recognised in the EEA, even when renting a car for a short trip. UK drivers will require one of three types of International Driving Permits (IDPs), depending on their destination and length of stay. Full details are available in this UK Government Guidance.

EU driving licences will continue to be valid in the UK.

The EU and UK have agreed, in principle, to enable drivers to continue to benefit from their existing insurance arrangements through the current Green Card scheme. However, under this arrangement, drivers will be required to obtain and carry a physical Green Card.

Travel insurance and health in the event of a no-deal Brexit after the transition period

Government guidance recommends taking out appropriate travel insurance with healthcare regardless of the outcome of post-Brexit negotiations. In the event of a no-deal EHIC cards will no longer be valid. UK travellers should be advised to check specific arrangements for their destination and ensure they plan any medical provisions. It is likely, however, that the EU and the UK will agree that travellers will be able to continue use the European Health Insurance Card (EHIC) to receive state-provided healthcare should they need it whilst travelling.

Travellers should be encouraged to check the NHS country specific webpage for advice. Travellers should bear in mind, however, that the European Commission has indicated that medical prescriptions issued in the UK will not be recognised in Member States after the transition period.

Mobile roaming in the event of a no-deal Brexit after the transition period

The EU’s rules on roaming fees, which prohibit additional roaming charges when a customer of an EEA-based mobile operator uses their phone whilst travelling elsewhere within the EEA, will cease to apply automatically to UK mobile operators.

As such, UK operators could choose to reapply charges for UK customers when travelling within the EEA after the transition period. However, a new UK law means that consumers are protected from getting mobile data charges above £45 without being notified and opting in to additional spend.

Data protection in the event of a no-deal Brexit after the transition period

An EU Commission ad hoc working party on Article 50 has indicated that an adequacy decision for UK data transfers could be resolved by the end of 2020 if the requirements are fulfilled.

However, should this not be the case, companies will need to ensure that either (i) they put in place appropriate safeguards for any restricted transfer of personal data or (ii) they are able to rely on an Article 49 derogation (for example, that the transfer is necessary for the performance of a contract).

Taxation in the event of a no-deal Brexit after the transition period

As of the withdrawal date, the EU rules on VAT will no longer apply. However, the impact on the taxation treatment of travel management services will be minimal as the main VAT ‘place of supply’ rules will continue to apply in broadly the same way for UK businesses that they do now. UK customers will continue to receive UK compliant VAT invoices from us.

If there is no deal by the end of the transition period, UK business will no longer have access to the EU VAT refund system. Instead, UK businesses will be able to claim refunds of VAT from Member States using the existing processes for non-EU businesses. This process varies across the EU and businesses will need to make themselves aware of the processes in the individual countries where they incur costs and want to claim a refund. You can find further information about claiming VAT refunds from Member States on the EU Commission’s website: https://ec.europa.eu/taxation_customs/business/vat/eu-country-specific-information-vat_en.

Return of inbound duty-free shopping but end of outbound tax-free sales

Under the current rules, UK residents can bring back an unlimited amount of goods from any of the countries within the EU as full price is paid for these goods in the place of purchase (including both duty and VAT).

Treasury has confirmed that, at the end of the transition period, duty-free shopping will be reintroduced for British passengers on travel to the EU by air, land and sea with significant increases to personal allowances currently available for non-EU travel. The duty-free allowance for all travel abroad will be increased to 42 litres of beer, 18 litres of wine and 4 litres of spirits stronger than 22% or 9 litres of port or sparkling wine. Allowances for tobacco will remain the same at 200 cigarettes or 250g of tobacco and other goods including souvenirs up to the value of £390. This applies to passengers arriving into England, Scotland and Wales. Northern Ireland will continue with the existing tax and duty regime under the agreed protocol.

For UK residents, it may also be possible get VAT back for shopping within the EU - the same as current non-EU residents - subject to certain restrictions.

However, whilst the UK government has confirmed the restoration of duty-free sales at the conclusion of the Brexit transition period, tax-free sales on airside products (exception alcohol and tobacco) will end for all travellers, both EU and non-EU bound passengers. Alcohol and tobacco products purchased at British ports, airports, international train stations, aboard ships and airlines will continue to be duty-free.

The Treasury announcement explained: “As part of these changes, VAT refunds for overseas visitors in British shops will be removed. Overseas visitors will still be able to buy items VAT-free in store and have them sent direct to their overseas addresses, while the costly system of claiming VAT refunds on items they take home in their luggage will be ended.”

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