EU Recommends Brexit Transition Period Until 2020

by Jason Gorringe, Tax-News.com, London

20 December 2017

On December 20, 2017, the European Commission proposed that the European Council should endorse the start of discussions on the next phase of the talks towards the UK's exit from the European Union, on a transitional arrangement that would apply for a period after the UK officially leaves the EU in March 2019.

Alongside recommending that the talks progress to the next phase, the Commission has released updated draft negotiating directives, setting out the European Union's expectations, which will be sent to the member states for approval. The Commission stated that in any deal for a transitional period, it will require that:

• There should be no "cherry picking"; the United Kingdom should continue to participate in the Customs Union and the Single Market (with all four freedoms). The Union acquis should continue to apply in full to and in the United Kingdom as if it were a member state. Any changes made to the acquis during this time should automatically apply to the United Kingdom.
• All existing Union regulatory, budgetary, supervisory, judiciary, and enforcement instruments and structures will apply, including the competence of the Court of Justice of the European Union.
• The United Kingdom will be a third country as of March 30, 2019. As a result, it will no longer be represented in Union institutions, agencies, bodies, and offices.
• The transition period needs to be clearly defined and precisely limited in time. The Commission has recommended that it should not last beyond December 31, 2020.

The recommendation from the Commission also recalls the need to translate into legal terms the results of the first phase of the negotiations, within which an agreement between the EU and UK was reached on three priority areas: citizens' rights; the dialogue on Ireland and Northern Ireland and the border; and the financial settlement.

The Commission had said EU citizens living in the United Kingdom will be protected under the deal, stating that the rights of EU citizens living in the United Kingdom and United Kingdom citizens in the EU27 will remain the same after the United Kingdom has left the EU.

It was recently agreed that the bloc and the UK should discuss their future trading arrangement, with talks to soon move on to trade and tax matters.

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