Impact of a 'no deal' Brexit on your travel management programme

Brexit has ever-changing goalposts and the fallout of these discussions are a hot topic throughout the Euro Zone. At FCM, we aim to inform our clients of how these changes may impact their travel programmes, although we’re not sure of the definitive impacts on the travel industry, we have set out in this document some key areas of your company’s travel programme that could be impacted in the unlikely event that the EU and the UK fail to strike a deal on Brexit.

New passport rules in the event of a 'no deal' Brexit

From 29 March 2019 there could be significant disruption at borders when travelling between the EU and UK. Passport and security queues designated for EU nationals might not be able to be used by UK passport holders, and vice versa. New customs arrangements at ports and airports might similarly cause knock-on delays.

Travellers will need to consider the additional time required for passport and security checks, as well as the impact of knock-on delays when travelling between the EU and the UK. Visa-free travel throughout the Schengen Area may no longer be permitted for travellers on a UK passport, depending on whether the UK is designated as a third country for the purposes of the Schengen Area or added to the list of exempt countries.

It is expected that, should the UK be designated as a visa free country, authorisation to enter the Schengen Area will be through the European Travel Information and Authorisation System (ETIAS), effective from 2021. Passport validity periods might also change. UK passport holders might need to make sure their passports have at least 6 months validity remaining on the date they arrive in the EU and any adult passport older than 9 years and 6 months may not be accepted for entry. For UK travellers, find out how to renew your passport.

FCM clients will benefit from the expert services of our Travel Essentials team, based in our Chancery Lane office in London. Our in-house specialists provide visa and passport services and advice along with more complex immigration consultations.

Air transport in the event of a 'no deal' Brexit 

As of the withdrawal date, the UK will automatically cease to be covered by air transport agreements of the EU, which would raise serious challenges. The vast majority of UK passenger traffic by volume is regulated by air services agreements negotiated at an EU level. These agreements cover intra-EU air traffic as well as the UK’s links with certain third countries such as the USA. Continuation of these services depends on the UK securing the necessary access rights. Grounding most flights in and out of the UK is clearly not an option. The Commission and the UK Government have therefore discussed a “bare-bones” agreement in the event of a 'no deal' which would allow the continuation of direct flights between the EU and the UK and possible access rights for relevant third countries during a transition period.

Failing any agreement between the EU and the UK, bilateral agreements will need to be struck with each Member State and each third country with access regulated by EU agreements. Air passenger rights, including compensation payments for delay, are likely to continue to apply to all flights in and out of the EU/UK. However, at an absolute minimum, they will continue to apply to (i) an EU airline flying from the UK into the EU; and (ii) any airline flying from the EU into the UK.

FCM has strong relationships with all the relevant airlines and as a result be able to update our clients if and when schedules will be impacted.

Rail transport in the event of a 'no deal' Brexit

It’s unlikely that the Eurostar and the Eurotunnel will face barriers to their continued operation, even in the event of a 'no deal' Brexit. EU law will continue to require that the operators on cross-border services comply with their national regulations, as well as those of the EU. There is no reason that the owners of the Eurostar and the Eurotunnel should cease to comply with these laws. Rail passenger rights, including compensation payments for delay, will continue to apply.

Driving licences in the event of a 'no deal' Brexit

In the extremely unlikely event that there is no agreement on mutual recognition, from 29 March 2019 driving licences will no longer be recognised between the EU and the UK. Drivers would then be required to obtain international driving permits, even when renting a car for a short trip. Mutual recognition of minimum compulsory insurance might also be affected. However, the EU and UK have agreed, in principle, to enable drivers to continue to benefit from their existing insurance arrangements through the current Green Card scheme.

Travel insurance and health

From 29 March 2019 travellers would need to consider taking out insurance that includes medical treatment when travelling between the EU and the UK, increasing the cost of insurance and potentially creating issues for travellers with pre-existing conditions. It is likely, however, that the EU and the UK will agree that travellers will be able to continue use the European Health Insurance Card (EHIC) to receive healthcare should they need it whilst travelling.

Data protection in the event of a 'no deal' Brexit

As with the flow of people across borders, the flow of personal data will also be affected by a 'no deal' Brexit. The UK will become a third country for the purposes of the General Data Protection Regulation and, unless an adequacy decision is granted in the UK’s favour, companies will need to ensure that either (i) they put in place appropriate safeguards for any restricted transfer of personal data or (ii) they are able to rely on an Article 49 derogation (for example, that the transfer is necessary for the performance of a contract).

Information on how FCM Travel Solution’s protects personal data can be found here.

Taxation in the event of a 'no deal' Brexit

As of the withdrawal date, the EU rules on VAT will no longer apply. However, the impact on the taxation treatment of services provided by FCM Travel Solutions will be minimal as the main VAT ‘place of supply’ rules will continue to apply in broadly the same way for UK businesses that they do now. Clients will continue to receive UK compliant VAT invoices from FCM Travel Solutions regardless of whether a deal is reached prior to 29 March 2019.

If the UK leaves the EU without an agreement, UK business will no longer have access to the EU VAT refund system. Instead, UK businesses will be able to claim refunds of VAT from Member States using the existing processes for non-EU businesses. This process varies across the EU and businesses will need to make themselves aware of the processes in the individual countries where they incur costs and want to claim a refund.

You can find further information about claiming VAT refunds from Member States on the EU Commission’s website: https://ec.europa.eu/taxation_customs/business/vat/eucountry- specific-information-vat_en.

Return of Duty Free Shopping

Under the current rules, UK residents can bring back an unlimited amount of goods from any of the countries within the EU as full price is paid for these goods in the member state of purchase (including both duty and VAT). Travellers can expect to continue to bring an unlimited quantity of non-duty free goods back from EU countries until 29 March 2019. Should 'no deal' be struck, duty free shopping will be available for UK residents - being non-EU residents - on travel to the EU by air, land and sea.

However, the duty free allowance would likely be reduced to levels similar to travellers returning from non-EU nations. This is currently: 200 cigarettes or 250g of tobacco, 16 litres of beer, 4 litres of wine, 1 litre of spirits stronger than 22% or 2 litres of port or sparkling wine, and other goods including souvenirs up to the value of £390.

For UK residents, it may also be possible get VAT back for shopping within the EU - the same as current non-EU residents - subject to certain restrictions. Vice versa, for EU-residents, it may be possible that duty free shopping returns for shopping within the UK. Whilst not the return of the intra-EU duty free rules that existed before 1999, this should avail travellers more value for their money.