Brexit is now official – with the UK finally leaving the EU on January 31st, 2020. It’s been a painfully slow and tumultuous process that finally has come to fruition. A process that effects and will affect several various aspects of the lives of those within the UK as well as citizens of EU countries. But how exactly?
- Brexit and the transition period
- Brexit consequences for freelancers
- How to prepare?
Brexit and the Brexit transition period
It is certain that Brexit has been a controversial topic over the last few years. Even now, it is difficult to ascertain just exactly how it’ll affect both the EU and UK economy.
The effects will undoubtedly find their way into the lives of freelancers who operate in either region. And so it is important for you to understand how this will impact your freelancer business and what you need to do to minimize any potential fall-out.
As a freelancer, your business may face a few barriers but also see new opportunities and it all comes down to how you prepare for the changes that are coming.
Brexit transition period (February, 1st to December 31st, 2020)
Although Brexit has officially begun, the year 2020 will see the UK and EU negotiating additional arrangements and rules that will regulate their relationship in the future.
And so presently, all current rules on travelling, trading, immigration, business for the EU and the UK will apply throughout 2020. The UK will remain part of the EU Single Market and Custom Union during this transition period.
The new rules will take effect on January 1, 2021 when the UK will completely detach from the EU. Join our IT freelancer community today!
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How will Brexit affect freelancers?
The level of impact will depend on a variety of factors, most importantly being a “deal” or “no-deal ” Brexit. While it is hard to dictate what the exact changes may be, here are certain areas that may be hit in the transition.
Now it is important to understand that your situation as a freelancer (whether you are an EU or UK Freelancer) will affect how these changes apply to your freelancing business. Let’s take a closer look:
An important aspect to consider in the Brexit process is its effect on VAT charges between the U.K. and Europe. If a deal has been negotiated before December 31, 2020, we can expect rates and charges similar to the VAT rates currently in place.
How things go in the event of a no-deal may be of some concern – however, the U.K. government has reassured that they are not looking to increase VAT charges. Take from that what you will but we would suggest keeping an eye out on any developments.
In any case, freelancers would need to say goodbye to the EU VAT number that allowed them to easily operate within the EU (intra-community trade) when their businesses were registered on the VAT Information Exchange System.
Now freelancers need their EORI number, which stands for Economic Operators Registration and Identification number”.
Freelancers can request the assignment of their EORI number to the customs authorities of the country where they are based. Here’s the list of custom authorities of EU member states.
2. Customs and tolls
The exit of the UK from the Union will imply that everybody trading with the UK will not have to comply with customs formalities in line with all non-EU countries.
All imports or exports from or to the UK will need to be cleared in a customs office meaning increased control on customs, payment of customs duties and further charges on imports or exports such as quality standards, health standards and so on.
Furthermore, you will also have to submit to the relevant customs controls, the payment of customs duties and other derived taxes such as health and quality certifications, etc.
3. Intellectual Property and Contracting
The majority of Intellectual Property law is standard across the EU – including of course, the UK presently.
And so it is crucial that freelancers and small-business owners who are IP owners identify which of their rights may be affected and how best to avoid any issues that may arise as a result. The UK government released the following in regards to the rules:
“Applicants with pending applications for an EU trademark or a registered Community design will not be notified and after exit will need to consider whether they refile with the Intellectual Property Office to obtain protection in the U.K.”
However, a no-deal Brexit may lead to significantly greater implications regarding IP for freelancers. Only time will tell what path the UK heads towards but in the meantime, ensure all your required paperwork has been diligently filed and is up to date.
4. Immigration and Mobility
Changes surrounding ‘free movement’ may be one of the biggest concerns for a lot of British nomad freelancers who often travel for work. With the looming possibility of requiring a visa for travel, freelancers might take a hit in their workload within the EU.
Visas can be an expensive and time-consuming process and may lead to EU contractors seeking non-UK freelancers. But again, nothing has been confirmed yet and “free movement” may yet be part of a deal between the UK and Europe.
5. Social Security
Presently, the UK is part of Europe’s contribution system relating to sickness, benefits, and pensions. Should we see a Brexit deal, we can expect minimal changes to the current social security system for UK and EU citizens. In the event of a no-deal, however, social security contributions could change quite drastically.
Depending on where you are located and whether you’re from the EU or UK, you may be asked to pay social security contributions to both the UK and your current state of residence in the EU.
6. Client Relocation
The results of a recent survey conducted amongst several companies indicate that over a third of UK based operations planned on moving away from the UK in the event of a no-deal Brexit.
This is especially true for IT sectors who claim they will relocate from the UK. This would be important to consider for you as a freelancer. If you are a freelancer within the UK, reach out to clients and try and ask about their Brexit plans to best prepare for your future.
On balance, on the EU side, opportunities may increase with a predicted 3,000+ increase in jobs within the IT and Finance sectors.
What can you do to prepare your freelance business for Brexit?
The following are a few small steps you can begin taking to prepare yourself for the transition at the end of the year:
- Register with the customs authorities and get your EORI number
- EU freelancers can apply for a residence permit under the EU Settlement Scheme
- Stay up to date on relevant paperwork regarding the status of your IP.
EU citizen working in the UK
EU citizens willing to live and work in the UK after 2020 must apply for a residence permit unter the EU Settlement Scheme until 31.12.2020. If the application is successful, either the Pre-Settled Status or the Settled Status will be granted.
Both statuses entitle you to:
- Work in the United Kingdom
- Entitlement to the NHS
- enrolment at an educational institution or continuation of studies/training
- Receipt of public funds such as social benefits or pensions, if there is a right
- Entering and leaving the United Kingdom
The Settled Status
Settled status (permanent status) is granted to anyone who moved to the UK before 31 December 2020 and has lived in the UK continuously for at least five years.
Those who have Settled Status may stay as long as they wish and are also entitled to apply for British citizenship.
The Pre-Settled Status
Pre-settled status (upstream permanent status) is granted to anyone who moved to the UK before 31 December 2020 and has lived in the UK for less than five years without interruption.
Pre-settled status entitles you to five years’ residence in the UK and a subsequent application for settled status. The test on the English government’s website allows a quick check to see what measures need to be taken in which situation.
UK citizen working in the EU
As a UK citizen, if you currently reside in another EU country before the transition on 31 December 2020, the Withdrawal Agreement secures your rights and will allow you to continue living in the aforementioned EU country after 31 January 2020.
You will continue to receive in general, similar entitlements to work, study and access public services and benefits as before the transition period of Brexit.
Depending on the country of residence within the EU, an application for a residence status may be required to prove that you were a resident before 31 December 2020. You will have until at least 30 June 2021 to do this.
For example, here are the steps to apply for a residence permit in Germany.
We hope this has been useful in helping you prepare for the final stages of Brexit. If you have any questions or concerns, leave a comment below!