With the Brexit transition period nearing its end, we set out below an update on the EU 27 temporary transitional measures – the table below lists the jurisdictions for which we have received confirmation of the current position, further updates to other jurisdictions will be posted as and when we receive them.
Summary of jurisdictions with significant developments
We list below the jurisdictions where there have recently been significant changes in position or key developments in regards to the temporary transitional measures:
- Belgium – On 23 December 2020, an amendment to the Belgian Brexit law has been published which allows the government in case of a no-deal Brexit to provide for a transitional period for such entities that, as a result of Brexit, lose their European passport and have not yet obtained the authorisation to exercise their activities or provide their services in Belgium as from 1 January 2021. These entities may continue to provide their services in Belgium provided that: (1)They are duly authorised in the UK for the activities they perform or services they provide; (2) They only intend to provide these services in Belgium to non-consumers; and (3) These services can only be provided in Belgium after the relevant entities have submitted an application for the required license or registration with the competent Belgian regulator. This transitional period will be no longer than 12 months.
- Cyprus – On 22 December, the Cyprus Securities and Exchange Commission announced the introduction of a Temporary Permissions Regime to be made immediately available to UK-authorized investment firms in order to facilitate smooth post-Brexit transition, in the event that the UK and EU will not reach a deal by 31 December 2020. Eligible under the Cyprus TPR are UK-investment firms without physical presence in Cyprus providing investment services and/or carrying out investment activities with Cyprus-based professional clients and eligible counterparties.
- Liechtenstein – Liechtenstein has created the possibility for UK Banks and Investment Firms to provide cross border services to eligible counterparties and professional clients upon according notification. The activity may be taken up once the FMA has confirmed the completeness of the notification submitted. This regime shall stay in place until 31 December 2022, or if earlier, the entry into force of an equivalence decision in the EEA.
- Norway – In 2018, the Ministry of Finance adopted a temporary regulation authorising firms established outside the EEA that perform investment services and activities in Norway based on home state authorisation and supervision under the EEA Agreement to continue to provide such investment activities to professional clients and eligible counterparties in Norway after the UK’s exit from the EU, subject to certain conditions. The Ministry has recently adopted amendments specifying that the regulation will remain in force after 31 December 2020. The regulation will be revoked on 1 January 2023.
- Portugal – The Portuguese TPR was published on 23 December, with specific provisions concerning inter alia banking and investment services, UCITS/AIFs, and insurance agreements. The TPR will start to apply from 1 January 2021 if, on that date, no agreement is reached between the EU and the UK, or no equivalence decision is adopted, that regulates the matters covered by the Portuguese TPR. The Portuguese TPR will cease to apply from 31 December 2021 (subject to certain exceptions).The regime sets out a period during which firms may opt to either continue to exercise the activity in Portugal, subject to compliance with certain requirements, or orderly cease the activity within a reasonable timeframe.
- Sweden – The Swedish government has adopted a new provision as part of the existing temporary permission regime, which sets out an exemption relating to UK firms whose sole investment activity in Sweden is trading on their own account on a marketplace. Provided that such a firm had exercised the right to provide services in Sweden (on the basis of the so-called passport regime) on 29 March 2019, that the trading takes place through direct electronic access on a marketplace and that the trading is covered by the firm’s authorisation in its home jurisdiction, then such trading is allowed without having a Swedish authorisation in place until the end of 2021.
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Jurisdiction |
Are any temporary transitional measures available post 31st December 2020? | Contact details | |
| Summary | Further detail | ||
| Austria | No temporary permissions regime that would enable UK firms to provide cross-border services. | A ‘BREXIT – Accompanying Law 2019’ did not enter into force as it was enacted under the condition that the UK leaves the EU without a Withdrawal Agreement. Currently, no other measures have been proposed. | Stefan Geppert sg@sggm.at Geppert & Maderbacher Rechtsanwälte GesbR |
| Belgium | There is a transitional regime in place. | On 23 December 2020, an amendment to the Belgian Brexit law has been published which may have an impact on UK banks and financial services providers who are active in Belgium.
The amendment allows the government in case of a no-deal Brexit to provide for a transitional period for such entities that, as a result of Brexit, lose their European passport and have not yet obtained the authorisation to exercise their activities or provide their services in Belgium as from 1 January 2021. These entities may continue to provide their services in Belgium provided that:
This transitional period will be no longer than 12 months. |
Matthias De Cock Matthias.Decock@lydian.be Lydian |
| Bulgaria | No temporary permissions regime that would enable UK firms to provide cross-border services. | In recent guidance on a no-deal post-Brexit scenario, Bulgarian Financial Supervision Commission (FSC) instructed investment firms, based and licensed in UK, to cease their activities in Bulgaria and to inform within 7 days of the UK leaving the EU their existing clients about the possibility to transfer their financial instruments to another investment firm. The UK licensed investment firms shall transfer the client’s financial instruments, money and other assets to the investment firm indicated by the client, which has given consent, or to a depository institution. Investment firms shall notify their clients of the actions taken for the transfer of client assets within five working days of the transfer, respectively shall notify the FSC within three working days of the expiration of the term for transfer of client assets.
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Krassimir Stephanov Krassimir.Stephanov@Dgkv.Com Djingov, Gouginski, Kyutchukov & Velichkov |
| Croatia | No temporary permissions regime that would enable UK firms to provide cross-border services. | Croatian Agency for Supervision of Financial Services published a detailed notice on its website on 1st December 2020 confirming no temporary permission regime for UK entities providing cross border financial services.
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Mr Edin Karakaš edin.karakas@zuric-i-partneri.hr Mr Mihovil Granić |
| Cyprus | There is now a temporary permissions regime in place. | On 22 December 2020, the Cyprus Securities and Exchange Commission (“CySEC”) announced the introduction of a Temporary Permissions Regime (the “Cyprus TPR”) to be made immediately available to UK-authorized investment firms in order to facilitate smooth post-Brexit transition, in the event that the UK and EU will not reach a deal by 31 December 2020. Eligible under the Cyprus TPR are UK-investment firms without physical presence in Cyprus providing investment services and/or carrying out investment activities with Cyprus-based professional clients (within the meaning of Section I of Annex II to MiFID II) and eligible counterparties.
UK firms which wish to make use of the TPR must submit a relevant notification form to CySEC by 31 December 2020 at a dedicated email address of CySEC, setting out entity identification details and the list of services to continue offering to Cyprus on a cross-border basis to professional clients and eligible counterparties.
The Cyprus TPR, thus, gives the opportunity to UK investment firms, which will notify their intention to CySEC on time, to permissibly solicit and enter into new contracts with professional clients and/or eligible counterparties in Cyprus on a cross-border basis until 31 December 2021 without the requirement to establish a branch in Cyprus, as it would otherwise be applicable in the event of a no-deal Brexit unless a relevant equivalence decision is taken by the EU Commission in the meantime pursuant to Article 46(2)(a) of MiFIR. From 1st January 2022, UK firms which provided investments services on the basis of the TPR and which wish to continue soliciting professional clients and/or eligible counterparties in Cyprus, will be required to establish a Cyprus branch to be authorized by CySEC in accordance with the applicable framework for non-EU investment firms. |
Dimitris Papoutsis dimitris.papoutsis@neo.law Tel +357 25 110145 Elias Neocleous & Co LLC |
| Denmark | No temporary permissions regime that would enable UK firms to provide cross-border services.
UK firms seeking to service Danish customers will need to obtain a third-country licence – applications needed to have been made by 15 October 2020 to benefit from this regime.
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Under Danish legislation third country firms may obtain a cross-border licence for non-retail business. Retail business requires the establishment of a branch.
The Danish Financial Supervisory Authority (DFSA) recently provided new guidance and an application form on the application process of applications from UK firms, which was suspended for a period. On 20 August 2020, the DFSA announced that UK firms are again able to apply for a third country license if they wish to provide investment services in Denmark after the end of the transition period on 31 December 2020. As UK firms are subject to EU regulation in the transition period, investment services and activities can be carried out in Denmark in reliance on the MiFiID II passporting rules in the transition period.
UK firms who wish to carry out investment services and activities in Denmark after 31 December 2020, will have to apply for a third country license. The application form is now available with the DFSA and applications should be filed before 15 October 2020. |
Andreas Hallas Tel +45 38 77 43 72 ahp@kromannreumert.com Kromann Reumert |
| Estonia | No temporary permissions regime that would enable UK firms to provide cross-border services. | The Ministry of Foreign Affairs have confirmed that there are currently no temporary relief measures or regimes in the area of services in Estonia to prepare for the situation where the transition period ends and the UK and EU do not conclude a free trade agreement. The Ministry is still in the process of considering available options.
The Ministry of Foreign Affairs has confirmed that there are currently no temporary relief measures or regimes in the area of services in Estonia to prepare for the situation where the transition period ends and the UK and EU do not conclude a free trade agreement. There are also no prospective or actual legislative changes impacting UK firms within the Estonian jurisdiction that would be relevant. The main aim in such circumstances is to treat UK firms as third country entities to begin with but the Ministry stated they are hopeful for a separate agreement with the UK. |
Krista Severev krista.severev@sorainen.com Tel +372 6 400 903 Sorainen |
| Finland | No temporary permissions regime that would enable UK firms to provide cross-border services.
UK firms seeking to service Finnish customers will need to obtain a third-country licence – applications needed to be made by the end of 2020 to benefit from this regime. |
An amendment to the Investment Services Act (ISA) enabling third-country investment firms to offer services into and conduct investment activities in Finland with professional clients and eligible counterparties without establishing a branch came into force on 20 March 2019. This involves applying for authorization from the Finnish Financial Supervisory Authority (FFSA).
Reliance on the regime requires that an application for a third-country firm cross-border licence is submitted with the FFSA before Brexit. As the likelihood of a no-deal Brexit increases, the FFSA has adopted the view that the continued servicing of existing agreements with Finnish clients for investment services and activities (as defined in MiFID II) will, at least in most cases, also amount to the provision of investment services into Finland triggering the licensing requirements. The previous position of the FFSA and the travaux préparatoires for the Finnish Investment Services Act in force was that the continued servicing of existing agreements would not necessarily constitute activity subject to a so-called Brexit license if no new services were offered to Finnish clients post-Brexit. There is no information yet on whether this new, stricter interpretation would affect credit institution services as well, whilst the FFSA has published formal, more lenient guidance regarding UK funds and fund managers. The application for a third-country firm cross-border licence is free-form and it is submitted by email to the FFSA. Appendices must be submitted in pdf. The applicant third country firm must meet certain organisational and supervisory criteria (e.g. having a home state licence and sufficient supervision, capital sufficiency, AML and KYC, fitness and propriety of management and beneficial owners, and membership of investor protection fund). The processing time is a maximum of six months from receipt of a complete submission, or a maximum of one year in total. The FFSA will not start processing the applications until Brexit occurs. |
Maria Lehtimäki maria.lehtimaki@ww.fi T: +358 9 668 95235 | M: +358 40 578 9398 Waselius & Wist |
| Germany | No temporary permissions regime that would enable UK firms to provide cross-border services.
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The German legislator introduced various legislative measures at the federal and state level in preparation of Brexit. One of the key federal acts was the ‘Tax Act relating to Brexit’ (Brexit-Steuerbegleitgesetz – Brexit-StBG). Among other things the Brexit-StBG introduced a national transition regime for regulated UK market participants operating in Germany under an EU passport. However, the transitional rules were limited to a no-deal Brexit scenario in which the UK would have left the EU without any Withdrawal Agreement. The national transition regime has not been renewed and, thus, is now obsolete.
Under general rules for non-EEA entities, three exemptions from the national licensing requirements could be particularly relevant for UK market participants: (i) an exemption from the licensing requirements granted in the individual case, (ii) the general reverse solicitation exemption and (iii) a new exemption for Proprietary Business as a member of a trading venue.
The German regulator has not published any relief measure for UK entities so far. Rather, in November and December, the German Federal Financial Supervisory Authority (BaFin) published letters to regulated UK entities (investment firms, fund management companies, payment institutions) that currently operate in Germany under an EU passport. In these letters, BaFin reminds the UK entities that they will lose their European passports at the end of the year and threatens to issue cease and desist orders. |
Michael Born Michael.Born@nortonrosefulbright.com Norton Rose Fulbright LLP |
| Iceland | No temporary permissions regime that would enable UK firms to provide cross-border services. | Guðbjörg Helga Hjartardóttir gudbjorg@logos.is Tel +354 540 0300 Logos Legal Services |
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| Liechtenstein | UK Banks and Investment Firms may provide investment services to certain domestic clients post 31 December 2020 upon notification in accordance with Art 35c Banking Ordinance. | Within the framework set out in Art. 46 MiFIR, Liechtenstein has created the possibility for UK Banks and Investment Firms to provide cross border services to eligible counterparties and professional clients upon according notification. The activity may be taken up once the FMA has confirmed the completeness of the notification submitted.
This regime shall stay in place until 31 December 2022, or if earlier, the entry into force of an equivalence decision in the EEA. |
Hannes Arnold hannes.arnold@gasserpartner.com Gasser Partner |
| Luxembourg | No temporary permissions regime that would enable UK firms to provide cross-border services. | The previous relief measures that were in place expired with the introduction of the transitional regime.
Previous CSSF communications were issued on the basis of a no deal Brexit and CSSF individual decisions granting a 12 month transition regime to UK entities and all notifications made in that context have lapsed. However, law no.238 of 11 April 2019 applies in any scenario concerning the UK’s withdrawal from the EU (whether or not a no deal Brexit). This law grants a 12 month remedy to rectify any breach of the investment policy or investment restrictions in a UCITS, Part-II Funds or SIF resulting from Brexit. This requirement only covers positions taken prior to 31st December 2020.
The CSSF issued on 31 January 2019 and on 7 December 2020 two press releases (CSSF Press Release 20/03 and CSSF Press Release 20/26) which followed the formal adoption of the Withdrawal Agreement by the Council of the EU on 30 of January 2020, and the fact that the UK left the EU on 31 January 2020 at midnight (the Exit Date).
Pursuant to CSSF Press Release 20/26, “As of the end of the transitional period, any issues of non-compliance with applicable investment rules or policies triggered by the withdrawal of the UK from the European Union will not be considered as occurring in circumstances defined under Article 49(2) of the Law of 2010 concerning undertakings for collective investment for the purposes of Circular CSSF 02/77 (i.e. they will hence be considered as “active breaches”).
The CSSF specifically draws the attention to the provisions related to UCITS master-feeder structures (i.e. a UCITS feeder fund established in Luxembourg investing into a UCITS master fund established in the UK), given that UK UCITS will qualify as “other UCIs” in the sense of articles 41.1(e) and 46.1 of the Law of 2010, the investments into which may not in aggregate exceed 30% of the assets of the Luxembourg UCITS.
In relation to Money Market Funds, the CSSF hereby draws specific attention to the provisions of Article 12 (c) of the Regulation (EU) 2017/1131 on Money Market Funds (MMFR), requiring that deposits with a credit institution having its registered office in a third country is an eligible investment by an MMF only where the third country credit institution is subject to prudential rules considered to be equivalent to those laid down in Union law in accordance with the procedure laid down in Article 107(4) of Regulation (EU) No 575/2013. At the date hereof this will not be the situation as of 1 January 2021 in relation to credit institutions having their registered office in the UK”. Please note that the reference to Art. 49(2) of the 2010 Law is a reference to UCITS rules. Given, however, that Circular CSSF 02/77 also applies to other fund structures, in case these have not fixed their own policy, we believe it is advisable, in such case and for structures where breaches in comparable situations would happen due to the change in category of the target because of Brexit, to take the same approach, i.e. to make the positions post-Brexit compliant, before 1 January 2021. |
Nam Nguyen Nam.Nguyen-Groza@nortonrosefulbright.com Manfred Dietrich |
| Malta | No temporary permissions regime that would enable UK firms to provide cross-border services. | The temporary permission regime has expired and the MFSA has not indicated that it will renew or introduce another temporary permission regime. | David Borg Carbott dbcarbott@ganado.com Ganado Advocates |
| Monaco | No temporary permissions regime that would enable UK firms to provide cross-border services. | There are no specific cross-border regimes put in place for UK firms post Brexit. | Remi Delforge remid@delforgelaw.com DL Corporate & Regulatory |
| Netherlands | No temporary permissions regime that would enable UK firms to provide cross-border services. | Floortje Nagelkerke Floortje.Nagelkerke@nortonrosefulbright.com Norton Rose Fulbright LLP |
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| Norway | The temporary permissions regime is in place. | In 2018, the Ministry of Finance adopted a temporary regulation authorising firms established outside the EEA that perform investment services and activities in Norway based on home state authorisation and supervision under the EEA Agreement to continue to provide such investment activities to professional clients and eligible counterparties in Norway after the UK’s exit from the EU, subject to certain conditions. Please note that the regulation does not apply to opt-up professionals (only per se professionals).
The Ministry has recently adopted amendments specifying that the regulation will remain in force after 31 December 2020. The regulation will be revoked on 1 January 2023. For insurance contracts, credit/deposits and marketing of funds, different regimes applies and there is some uncertainty still. |
Ole Andenæs oea@wr.no Wikborg Rein Advokatfirma AS |
| Poland | No temporary permissions regime that would enable UK firms to provide cross-border services. | In April 2019, the Polish government formally adopted a legislative act that would introduce temporary measures applicable to select financial institutions established or located in the UK in an event of a no-deal Brexit. However, there have been no further legislative initiatives dealing with the status of UK firms doing business in Poland following the end of the transition period where the UK – EU do not enter into a free trade agreement. | Agnieszka Braciszewsk Agnieszka.Braciszewska@nortonrosefulbright.com Norton Rose Fulbright LLP |
| Portugal | There is a transitional regime in place. | The Portuguese TPR was published on 23 December, with specific provisions concerning inter alia banking and investment services, UCITS/AIFs, and insurance agreements.
The TPR will start to apply from 1 January 2021 if, on that date, no agreement is reached between the EU and the UK, or no equivalence decision is adopted, that regulates the matters covered by the Portuguese TPR. The Portuguese TPR will cease to apply from 31 December 2021 (subject to certain exceptions). The Portuguese TPR provides that, after the end of the transition period provided in the EU-UK Withdrawal Agreement, credit institutions, payment service providers and e-money institutions, with head office in the UK and which act in Portugal under an EU Passport, can only execute contracts or carry out new transactions in Portuguese territory in respect to deposit-taking, lending and payment or e-money services, if they are authorized by the Bank of Portugal. However, the Portuguese TPR provides that such entities may, after the Brexit Effective Date, perform the necessary acts to perform and comply with contracts relating to the above services and activities that are executed until the Brexit Effective Date, including ancillary or instrumental services to the main existing contracts executed with a client resident in Portugal and which do not constitute new transactions or contracts. The Portuguese TPR provides that UK credit institutions and investment firms authorized to provide investment services and ancillary services under an EU passport into Portugal, may continue to provide such services after the Brexit Effective Date, subject to the following:
If the UK entity intends to request authorisation to maintain its activity in Portugal, it must submit an authorisation request to Portuguese competent authority within 6 months after the Brexit Effective Date. |
João Dias Lopes joao.diaslopes@plmj.pt PMLJ |
| Slovakia | No temporary permissions regime that would enable UK firms to provide cross-border services. | Slovakia has adopted Act No. 83/2019 Coll. (the so-called Lex Brexit), which provides for certain transitional measures that would have applied in the case of hard Brexit. Those measures concerned several areas, such as tax advisors, attorneys, private vets, social security insurance, health care insurance, employment services, drug and medical devices, residence of foreigners, etc. However, none of the measures introduced by the Lex Brexit dealt with the position of UK financial services firms and no transitional relief measures were proposed to be adopted in this respect. | Oliver Weber oliver.weber@beatow.com Beatow Partners |
| Slovenia | No temporary permissions regime that would enable UK firms to provide cross-border services. | In its preparation for Brexit, Slovenian legislator adopted a special act – Act Regulating Certain Issues Regarding the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union without a Withdrawal Agreement – which provided for certain transitional measures. This act, however, did not address the situation of UK firms providing financial services in Slovenia and was limited to a no-deal Brexit scenario.
After the UK entered into a Withdrawal agreement with EU, no measures were adopted in relation to the position of UK firms upon the expiration of transition period. Therefore, once the transition period expires without the UK and EU concluding a free trade agreement, UK financial services firms will be considered as third-country financial services firms. |
Ana Furlan furlan@Rppp.si Rojs, Peljhan, Prelesnik and Partners |
| Spain | No temporary permissions regime that would enable UK firms to provide cross-border services. | In March 2019, the Spanish Government enacted Royal Decree Law 5/2019 (RDL) which provided a set of temporary measures to deal with a no deal Brexit scenario. The law covered an array of fields including financial services. However, the RDL no longer applies following the EU and UK entering into a Withdrawal Agreement. So far, no regulatory text has been enacted referring to the position where the UK leaves the transition period without a free trade agreement with the EU. Should the UK leave the transition period without a free trade agreement, UK entities shall be regarded as third country entities. Thus, notwithstanding the continuity of existing agreements, UK entities providing services in Spain must apply for the relevant authorisation if they wish to: (i) renew or amend their existing agreements; (ii) enter into new agreements; (iii) engage in the provision of new services; or (iv) where the activities derived from management of the agreements require authorisation. In anticipation of a no deal Brexit UK firms passporting services into Spain were to be allowed temporary relief from authorisation for a period of 9 months once the UK had left the EU. At present it is unknown whether this grace period would be introduced at the end of the transition period. | Luis de la Pena luis.de.la.pena@garrigues.com T. +34 91 514 52 00 Garrigues |
| Sweden | There is a temporary permissions regime that would enable UK firms to provide cross-border services. | The Swedish government has published an amendment to the previously adopted Brexit temporary regime, extending its validity by one year. This means that firms that that are licensed in the UK and who had exercised the right to provide services in Sweden (on the basis of the so-called passport regime) on 29 March 2019 can continue to provide investment services and ancillary services covered by their authorisation in relation to Swedish professional clients with whom the UK firm had an agreement in place on 29 March 2019, until the end of 2021.
In addition, the Swedish government has adopted another provision as part of the temporary permission regime, which was not part of the previously adopted regime. This new provision sets out an exemption relating to UK firms whose sole investment activity in Sweden is trading on their own account on a marketplace. Provided that such a firm had exercised the right to provide services in Sweden (on the basis of the so-called passport regime) on 29 March 2019, that the trading takes place through direct electronic access on a marketplace and that the trading is covered by the firm’s authorisation in its home jurisdiction, then such trading is allowed without having a Swedish authorisation in place until the end of 2021. |
Niclas Rockborn Niclas.rockborn@gda.se Rikard Sundstedt |
