This year again, as expected, Brexit was a central part of the Budget with significant amounts (€350 million) allocated to various departments across Government, write Brian Daly and Glenn Reynolds of our Brexit Response Team.
This includes €100 million allocated across the Revenue Commissioners, the Department of Enterprise, Trade and Employment and the Department of Agriculture and €200 million for staffing and infrastructure needs in 2021 – “Deal or no Deal”.
The Budget was prepared on the basis of a No Deal i.e. no Free Trade Agreement (FTA) being reached between the UK and the EU. In that context it has allocated €650 million in contingency funding to support affected sectors with €220 million being released immediately. This comes from a €3.4 billion COVID-19 and Brexit Recovery Fund.
The minister also announced in his speech that Ireland will seek to avail of the EU’s Brexit Adjustment Reserve in the coming years. The details of this fund have yet to be finalised.
It is welcomed that the Government continues to support businesses in preparing for Brexit notwithstanding the other obvious challenges of our time.
In addition to the measures announced, it is important to note that the Government will shortly bring forward a Bill (more commonly referred to as the Brexit Omnibus Bill) which seeks to preserve continuing access to certain priority services, benefits and reliefs relating to the UK that might otherwise be denied when the Transition Period ends on 31 December 2020. It is understood that it will apply regardless of whether there is an FTA.
The understood purpose of the Bill will be to prevent a cliff edge for Irish businesses and citizens on 1 January 2021 and to satisfy a number of obligations and commitments that Ireland has made to the UK outside of EU membership, e.g. under the Common Travel Area.
It is understood that the Bill will repeal and replace the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2019. Many of the provisions in this Act, which were subject to Ministerial Commencement Order, cannot be commenced as they were enacted on the basis of no agreement on the terms of the UK’s withdrawal from the EU.
It will be important to understand the impact of the measures which are included in the new Brexit Omnibus Bill, in addition to any measures which are not included.
Regardless of whether there is an FTA, important changes will apply for business from 1 January 2021. In the context of VAT & Customs, there will be new systems, processes and paperwork requirements. In addition, depending on the outcome of the trade negotiations, there may also be tariffs.
Our advice continues to be that businesses should be prepared in advance for these changes.
We have set out below key actions that businesses should take now in preparation for 31 December 2020 regardless of whether there is an FTA.