Withdrawal without an agreement: impact on businesses
It is possible that the UK will withdraw from the EU without an agreement. This scenario is called a no-deal Brexit. A no-deal Brexit would affect all companies that:
- are engaged in import or export or investment activities with the UK, or
- use content that originates from the UK in their production, such as raw materials, or services, such as cloud computing.
Following a no-deal Brexit, the UK will become a regular third country, with whom the EU will not have cooperation agreements or arrangements, excluding unilateral and temporary measures taken by the EU and the UK in some sectors. In general, this means that the free movement of goods, services, capital and people will end.
How these changes will affect a certain company depends on, among other things, the company's field of activity, location and position in the production chain. Below you will find examples of the changes caused by a no-deal Brexit. More specific information on sectors and products is available on the websites of the European Commission and the British Government.
- European Commission: Brexit checklist for traders
- European Commission’s Brexit preparedness notices for more than 80 sectors
- European Commission’s market access database that includes product-specific information about tariffs and procedures.
British Government website:
- How to prepare if the UK leaves the EU with no deal
- Find EU Exit Guidance for your business
- Prepare your business or organisation for Brexit
In the event of a no-deal Brexit, import duties would apply to certain goods imported to the EU from the UK and export duties would apply to certain goods exported from the EU to the UK.
Goods trade to the UK
- In case of a no-deal Brexit, the UK will introduce temporary import duties. On 8 October 2019, the UK published an update to its tariff rates published in March. Approximately 12% of the total value of UK imports would be affected by these tariffs. The tariffs would be temporary and valid for a maximum of 12 months.
- In this situation, the EU and the UK would not have a bilateral trade agreement. As a result, any goods imported to the UK from the EU would be subject to the same duties as goods imported to the UK from other countries with whom the UK does not have a trade agreement, e.g. the US, China or Brazil (so-called MFN duties).
- The UK import duties would not apply to imports from Ireland to Northern Ireland. Imports crossing at this border would not be subject to duties or customs checks.
- The UK import duties will apply to certain imports of Finnish companies. However, the updated tariffs are more positive for Finland and would only affect about 1% of the value of Finland’s UK exports.
- Updated UK Government press release on tariff regime
- Information on UK tariff rates for different products (if the product is not on the list, the tariff rate is zero)
- More information about product-specific tariff rates and procedures required by the UK: European Commission market access database
Goods trade from the UK – EU import duties
In the event of a no-deal Brexit, certain products imported to the EU (incl. Finland) from the UK will be subject to EU import duties. In this situation, any goods imported to the EU from the UK would be subject to the same import duties as goods imported from other countries with whom the EU does not have a valid trade agreement, e.g. the US and China (so-called MFN duties).
- Finnish Customs
- Product-specific information about EU import tariffs: European Commission market access database
- European Commission Customs guide for businesses: How to prepare for Brexit
In the event of a no-deal Brexit, goods imported from the EU to the UK, or vice versa, would require customs clearance. Customs clearance procedures are mandatory in trade with countries outside the EU. Companies trading with the UK should, without delay, assess what consequences mandatory customs clearance procedures could have for their business operations, and familiarise themselves with the trading requirements of non-EU countries.
- Information about customs procedures and declarations
- How to prepare for Brexit – Customs guide for businesses
- Information about customs procedures and declarations in the UK
Standards and regulation of goods trade
In case of a no-deal Brexit, the UK and the EU27 will become two separate market areas, with different regulations and controls. This means, among other things, that the requirements for bringing products into the two market areas may change. For example, a company may have to apply for permits, licences or certificates separately for the EU and the UK.
Imports to the EU:
A company’s position in the production chain may change following Brexit. Within the single market, a company may have acted as a distributor, but after Brexit the company will become an importer. An importer must meet considerably more requirements and duties than a distributor. If products are imported to the EU, they must meet EU conformity criteria. For certain products, this EU conformity must be verified by notified bodies. Notified bodies are conformity assessment bodies that test, inspect and certify products. When the UK becomes a third country, certificates issued by UK notified bodies on the EU conformity of products will no longer be applicable in the EU.
Products that have entered the market before Brexit will not be affected.
More information about product-specific requirements in case of a no-deal Brexit is available at the European Commission market access database.
Exports to the UK:
The UK has decided that in the event of a no-deal Brexit, goods approved in the EU will also be temporarily approved in the UK. In practice, this means that products approved under EU regulatory requirements can continue to be placed on the UK market.
The UK will introduce special arrangements for certain sectors. These include:
Regulation of goods trade in certain sectors
Conformity of technical equipment
Imports to the EU:
- Declarations and certificates of EU product conformity by UK-based notified bodies will no longer be accepted in the EU. EU declarations of conformity must be obtained within the EU27 area. If a product has been placed on the EU market before the withdrawal date, certificates issued by UK notified bodies on the EU conformity before Brexit will continue to apply in the EU after Brexit.
- In the event of a no-deal Brexit, industrial products can no longer be imported freely from the UK to the EU market. A company’s position in the production chain may change following Brexit.
Exports to the UK:
- The UK has decided that in the event of a no-deal Brexit, goods approved in the EU will also be temporarily approved in the UK. In practice, this means that products approved under EU regulatory requirements can continue to be placed on the UK market.
More information: Gov.uk: Guidance - Regulations and standards after Brexit
Imports to the EU:
- Marketing authorisation granted in the UK before Brexit or production facilities must be transferred to an EU or EEA country.
Exports to the UK:
- The existing EU marketing authorisations will automatically be converted into UK marketing authorisations (grandfathering). However, the marketing authorisation holders must confirm the validity of the authorisation with the UK authorities.
- If a company is currently in the process of applying or renewing its marketing authorisation in the EU, the company must also submit the application to UK authorities. The company must also ensure it is familiar with UK requirements and procedures.
- A no-deal Brexit may also result in the requirement to relocate to the UK. More specific information on sectors is available on the British Government website.
Imports to the EU:
- Companies must ensure that the manufacturer has an authorised representative based in the EU. The assessment of the product’s conformity with EU rules should take place in an EU-based assessment body.
Exports to the UK:
- The UK will recognise EU-approved and CE-certified products. If this changes, the British Government will inform about any changes separately.
Vehicles and vehicle type approvals
Imports to the EU:
- In the event of a no-deal Brexit, UK type approval authorities will no longer be considered EU type approval authorities. As a result, UK type approval authorities can no longer grant EU type approvals and a type approval must be obtained from an EU authority.
Exports to the UK:
- Companies holding an EU type approval must apply for a provisional UK type approval. The provisional UK type approval will be valid for two years.
Imports to the EU: multiple changes.
- The impact of Brexit will depend on the type of the imported chemical and the company’s role in the delivery chain as specified in the chemicals legislation. For instance, the importing company must issue a registration of the chemical with the European Chemicals Agency (ECHA) under the REACH regulation. In other words, a registration obtained in the UK will no longer be accepted.
Exports to the UK: multiple changes.
- As a rule, chemicals registered in the EU need a separate registration in the UK.
If the UK withdraws from the EU without an agreement, it becomes a third country. This means changes to export permit procedures.
Importing certain goods to the EU from third countries is restricted or forbidden. Restricted import items include weapons, plants, food, waste and pharmaceuticals.
A no-deal Brexit may result in changes for companies active in digital trade, including the transfer of personal data, taxation of electronic commerce and customs clearance of goods (see above for more specific information).
If the UK withdraws without an agreement, services will no longer be offered from the UK freely, and UK-based companies must apply for an establishment permit from the Finnish Patent and Registration Office.
Companies already operating in Finland that have a CEO or some of their board members living in the UK must ensure that they continue to meet the requirements concerning residence in the EEA, as specified in Finnish legislation.
If the UK withdraws without an agreement, the right of UK citizens to enter Finland for working purposes will end after the withdrawal date. After the withdrawal, the Finnish Aliens Act will apply to business-related entry.
As a rule, UK citizens may enter the country for 90 days (in any 180-day period) without a visa. A stay exceeding 90 days will require a residence permit.
Financial service providers are instructed to prepare for a no-deal Brexit and recognise its effects on their business.
A no-deal Brexit means that the right of companies located in the UK to participate in public procurement tenders in the EU or the Member States under the conditions specified in the EU Public Procurement Law will end. Following a no-deal Brexit, UK companies that are not based in the EU will have the same status as all other companies based in a third country and will be subject to the same rules as any third country tenderer.
Conversely, the right of EU-based companies to participate in public procurement tenders in the UK under the conditions specified in the EU Public Procurement Law will end.
A no-deal Brexit will affect EU trademarks, community designs and copyright, because protections granted in the EU may no longer automatically be valid in the UK. Brexit will not affect the existing protections within the EU27 area.
- EU trademarks and community designs
EU trademarks and community designs in the UK
- Existing intellectual property rights will continue to be protected in the UK. However, companies must renew their rights in the UK, which will require a minimal administrative burden.
- The right holders will not receive a new registration certificate from the UK authorities, but they can verify the details of the new UK right in the registration database (see the Gov.uk links below).
- Pending applications: Companies with a pending application in the EU must submit a separate application to the UK Intellectual Property Office, if the company wants to obtain protection in the UK too.
- Unregistered community designs: The UK will continue to protect unregistered community designs for the remaining period of protection of the right.
- British Government: Trademarks and designs if there’s no deal Brexit
Patents in the UK
- Any existing rights and licences will remain in force in the UK and no additional measures are required.
- Gov.uk: Guidance - Patents if there’s no Brexit deal
Supplementary protection certificates in the UK
A no-deal Brexit will have implications for copyright, including distribution rights, portability of online content, TV and radio broadcasting, administration of composed works, orphan works and sui generis database rights. Companies need to ensure that the offering of products and services that contain copyright-protected material has been authorised in the UK under agreements with right holders. In addition, companies must ensure that the right holder allows copyright-protected material to be brought into the EU.
A no-deal Brexit may also result in changes to taxation, including value-added taxes and excise duties.
Data transfer from the EU to the UK
After a no-deal Brexit, companies may no longer automatically transfer or release personal data originating in the EU to the UK. In case of a no-deal Brexit, the UK will be considered a third country under the EU data protection legislation. This means that the transfer of personal data is only possible through one of the instruments specified in Chapter 5 of the EU General Data Protection Regulation (GDPR). If the European Commission has not adopted an adequacy decision on the UK’s level of personal data protection, companies must ensure that they have at their disposal another instrument for data transfers to the UK. These instruments include, among others, standard contractual clauses for the transfer of personal data, binding corporate rules or codes of conduct and certification mechanisms.
Companies must, for example, identify what personal data will be transferred to the UK and determine the appropriate data transfer instrument under Chapter 5 of the GDPR. Companies must also ensure that the data transfer instrument is in proper use before the withdrawal date.
- Office of the Data Protection Ombudsman
Data transfer from the UK to the EU
The UK intends to incorporate standards that comply with EU data protection legislation into its national legislation in the event of a no-deal Brexit. For example, the UK will temporarily allow the transfer of personal data from the UK to the EEA area and Gibraltar. Companies must confirm whether they are required to designate a representative in the UK.
The Finnish Competition and Consumer Authority and the European Consumer Centre have prepared an information kit about consumer rights, particularly in the event of a no-deal Brexit. The withdrawal would affect consumer rights in a number of ways, in particular, in the areas of travelling and online shopping. The information kit also explains where consumers can turn to for help with questions related to consumer rights and Brexit.
A no-deal Brexit will impact the transport sector, including road goods traffic, certificates of professional competence, road transport permits, vehicle type approvals and manufacturer-specific CO2 calculations.
Effects of Brexit on air traffic include changes to safety checks of aircraft and aviation licenses.
As regards the shipping industry, a no-deal Brexit would result in changes for the maritime certificates of competence issued by the UK, among other things.
More information about the effects of a no-deal Brexit for road transport, air traffic and shipping:
If the UK withdraws from the EU without an agreement, it will no longer be a party to EU free trade agreements. Companies located in the UK and products or services produced in the UK would no longer be entitled to the benefits of EU FTAs, and content produced in the UK would not be regarded as EU content if it is used as part of an EU product. Consequently, content (e.g. a component) produced in the UK will no longer be considered to have EU-origin, which in turn could affect the customs exemptions in countries with which the EU has free trade agreements.