The German regulator BaFin issued a statement today about the paradigm shift for members of the public and companies in Europe.
BaFin noted that citizens, companies and the public administration have to prepare of the coming paradigm shift: The United Kingdom left the European Union in the beginning of the year and months later the transition period will end on 31 December 2020.
After intense negotiation, on Christmas eve, UK and EU agreed on a deal finalized a free trade agreement that will regulate their future relationship in many areas of economic activity.
The new agreement will take effect on provisional basis on 1 January 2021. The agreement is expected to be approved by the European Council by the end of the year and its provisional applications are to apply until 28 February 2021. The European Parliament needs to make final decision on the final application of the agreement by that date.
The regulator stated:
However, the provisions of this agreement will apply to financial services only to a limited extent, as these will remain subject to EU or UK supervisory law unless other regulations are in place – for example based on equivalence decisions of the European Commission.
BaFin added:
From a supervisory perspective, the United Kingdom will be considered a third country in relation to the EU once the transition period expires at the end of December 2020. As of January 2021, financial services providers domiciled in the UK will no longer be able to use the European passport, which had previously granted them access to the entire European Economic Area (EEA).
Companies based in the UK that intend to continue providing financial services in the EEA were required to set up a branch in an EEA state by the end of the transition period.
