TAX
Taxation
The European Union and the United Kingdom recognise and commit themselves to implementing the principles of good governance in the area of taxation, including the global standards on transparency and exchange of information, fair taxation, and the OECD standards against Base Erosion and Profit Shifting (BEPS). The European Union and the United Kingdom will promote good governance in tax matters, improve international cooperation in the tax area and facilitate the collection of tax revenues.
In the context of the European Union’s and the United Kingdom’s above the United Kingdom shall continue to apply provisions of its domestic law transposing the following provisions of European Union law, as applicable at the end of the transition period:
- Directive on administrative cooperation in the field of taxation
- Directive laying down rules against tax avoidance practices that directly affect the functioning of the internal market; and
- Article 89 of Directive on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.
The European Union and the United Kingdom, reflecting the direction set by the G20-OECD BEPS Action Plan, reaffirm their commitment to curb harmful tax measures. In this context, the United Kingdom reaffirms its commitment to the Code of Conduct for business taxation set out in the conclusions of the Council of Ministers of 1st December 1997 as reflected in the mandate and criteria established by those conclusions, as well as the guidance relating to the Code of Conduct, as applicable at the end of the transition period.
The Joint Committee may determine the measures necessary for the implementation of the above provision and shall discuss all matters related to their implementation
The dispute resolution provisions of the Withdrawal Agreement shall not apply in respect of disputes regarding the interpretation and application of the above paragraphs.
ENVIRONMENTAL PROTECTION
Non-regression in the level of environmental protection
With the aim of ensuring the proper functioning of the single customs territory, the European Union and the United Kingdom shall ensure that the level of environmental protection provided by law, regulations and practices is not reduced below the level provided by the common standards applicable within the European Union and the United Kingdom at the end of the transition period in relation to: access to environmental information, public participation and access to justice in environmental matters; environmental impact assessment and strategic environmental assessment; industrial emissions; air emissions and air quality targets and ceilings; nature and biodiversity conservation; waste management; the protection and preservation of the aquatic environment; the protection and preservation of the marine environment; the prevention, reduction and elimination of risks to human health or the environment arising from the production, use, release and disposal of chemical substances; and climate change.
Reflecting their common principles at the end of the transition period and their commitment to the 1992 Rio Declaration on Environment and Development, in giving effect to the obligations set out in this Article the European Union and the United Kingdom shall respect the following principles in their respective environmental legislation:
- the precautionary principle;
- the principle that preventive action should be taken;
- the principle that environmental damage should as a priority be rectified at source; and
- the “polluter pays” principle.
Having regard to the common standards referred to above, the Joint Committee shall adopt decisions laying down minimum commitments for:
- the reduction of national emissions of certain atmospheric pollutants;
- the maximum sulphur content of marine fuels which may be used in the territorial seas, exclusive economic zones, including in the SOx-Emission Control Area (SOx-ECA) designated in the North Sea and Baltic Sea area, and in the ports of the Member States of the European Union and of the United Kingdom; and
- those best available techniques, including emission limit values, in relation to industrial emissions.
These decisions shall apply as from the end of the transition period.
The European Union and the United Kingdom shall take the necessary measures to meet their respective commitments to international agreements to address climate change, including those which implement the United Nations Framework Conventions on Climate Change, such as the Paris Agreement of 2015.
The United Kingdom shall implement a system of carbon pricing of at least the same effectiveness and scope as that provided by the Directive establishing a scheme for greenhouse gas emission allowance trading within the Community.
The European Union and the United Kingdom reaffirm their commitment to implement effectively the multilateral environmental agreements to which they are party in their laws, regulations and practices.
The dispute resolution provisions of the Withdrawal Agreement shall not apply in respect of disputes regarding the interpretation and application of the above paragraphs.
Monitoring and enforcement related to environmental protection
Noting that within the European Union the effective application of European Union law reflecting the common standards referred to above is ensured by the Commission and the Court of Justice of the European Union acting under the Treaties, the United Kingdom shall ensure effective enforcement of the above obligations and of its laws, regulations and practices reflecting those common standards.
The United Kingdom shall ensure that administrative and judicial proceedings are available in order to permit effective and timely action by public authorities and members of the public against violations of its laws, regulations and practices, and provide for effective remedies, including interim measures, ensuring that any sanctions are effective, proportionate and dissuasive and have a real and deterrent effect.
The United Kingdom shall implement a transparent system for the effective domestic monitoring, reporting, oversight and enforcement of its above obligations by an independent and adequately resourced body or bodies (“the independent body”).
The independent body shall have powers to conduct inquiries on its own initiative concerning alleged breaches by public bodies and authorities of the United Kingdom, and to receive complaints for the purposes of conducting such inquiries. It shall have all powers necessary to carry out its functions, including the power to request information. The independent body shall have the right to bring a legal action before a competent court or tribunal in the United Kingdom in an appropriate judicial procedure, with a view to seeking an adequate remedy.
LABOUR AND SOCIAL STANDARDS
Non-regression of labour and social standards
With the aim of ensuring the proper functioning of the single customs territory, the European Union and the United Kingdom shall ensure that the level of protection provided for by law, regulations and practices is not reduced below the level provided by the common standards applicable within the European Union and the United Kingdom at the end of the transition period in the area of labour and social protection and as regards fundamental rights at work, occupational health and safety, fair working conditions and employment standards, information and consultation rights at company level, and restructuring.
The dispute resolution provisions of the Withdrawal Agreement shall not apply in respect of disputes regarding the interpretation and application of the above paragraphs.
Multilateral labour and social standards and agreements
Taking into account the importance of international cooperation and agreements on labour affairs and of high levels of labour and social protection coupled with their effective protection, the European Union and the United Kingdom shall protect and promote social dialogue on labour matters among workers and employers, and their respective organisations, and governments.
The European Union and the United Kingdom reaffirm their commitment to implement effectively in their laws, regulations and practices the International Labour Organisation Conventions, and the provisions of the Council of Europe European Social Charter, as ratified and accepted by the United Kingdom and the Member States of the European Union respectively.
The European Union and the United Kingdom shall exchange information on the respective situations and advances of the Member States and of the United Kingdom regarding the ratification of International Labour Organisation Conventions that are classified as up to date by the International Labour Organisation and of the revised European Social Charter and related Protocols.
The arbitration dispute resolution provisions of the Withdrawal Agreement shall not apply in respect of disputes regarding the interpretation and application of the above paragraphs.
Monitoring and enforcement of labour and social standards
Noting that within the European Union the effective application of European Union law reflecting the common standards referred to is ensured by the Commission and the Court of Justice of the European Union acting under the Treaties, the United Kingdom shall ensure effective enforcement of the above obligations and of its laws, regulations and practices reflecting those common standards in its whole territory.
The United Kingdom shall maintain an effective system of labour inspections, ensure that administrative and judicial proceedings are available in order to permit effective action against violations of its laws, regulations and practices, and provide for effective remedies, ensuring that any sanctions are effective, proportionate and dissuasive and have a real and deterrent effect.
STATE AID
State aid
With a view to preserving a robust and comprehensive framework for State aid control that prevents undue distortions of trade and competition, the European Union State aid law provisions listed in Annex 8 to the Protocol shall apply to the United Kingdom, in respect of measures which affect that trade between the parts of the single EU / UK customs territory. However, in respect of such measures of the United Kingdom authorities, references to the European Commission in those European Union law provisions shall be read as referring to the independent authority referred to below.
Notwithstanding the last paragraph the provisions of European Union law referred to shall not apply with respect to measures of the United Kingdom authorities supporting the production of and trade in agricultural products in the United Kingdom customs territory up to a determined maximum overall annual level of support, and provided that a determined minimum percentage of that exempted support complies with the provisions of Annex to the WTO Agreement on Agriculture. The determination of the maximum exempted overall annual level of support and the minimum percentage shall be set by the Joint Committee and governed by the procedures set out below.
Procedures
The Joint Committee shall determine the initial maximum exempted overall annual level of support and the initial minimum percentage referred to above, taking into account the most recent information available. The initial maximum exempted overall annual level of support shall be informed by the design of the United Kingdom’s future agricultural support scheme as well as by the annual average of the total amount of expenditure incurred in the United Kingdom customs territory under the Common Agricultural Policy under the current MFF 2014-2020.
The initial minimum percentage shall be informed by the design of the United Kingdom’s agricultural support scheme as well as by the percentage to which the overall expenditure under the Common Agricultural Policy in the European Union complied with the provisions of Annex 2 to the WTO Agreement on Agriculture as notified for the period concerned.
The Joint Committee shall adjust the level of support and percentage referred to in the first subparagraph informed by the design of the United Kingdom’s agricultural support scheme to any variation in the overall amount of support available under the Common Agricultural Policy in the European Union in each future Multiannual Financial Framework.
If the Joint Committee fails to determine the initial level of support and percentage in accordance with the first subparagraph, or fails to adjust the level of support and percentage, by the end of the transition period or within one year of the entry into force of a future Multiannual Financial Framework, as the case may be, application of the provision in relation to level of agricultural support above shall be suspended until the Joint Committee has determined or adjusted the level of support and percentage.
Independent authority
The United Kingdom shall establish or maintain an operationally independent authority (“the independent authority”). In performing its duties and exercising its powers, the independent authority shall have the necessary guarantees of independence from political or other external influence and shall act impartially.
In respect of measures of the United Kingdom authorities that are subject to the state aid provisions, the independent authority shall have powers and functions equivalent to those of the European Commission acting under the European Union State aid law provisions listed in Annex 8 to the Protocol. The independent authority shall be appropriately equipped with the resources necessary for the full application and the effective enforcement, in accordance with the above provisions on state aid, of the European Union State aid law provisions listed in Annex 8 to the Protocol. These resources include human, technical and financial resources, premises and infrastructure.
Decisions of the independent authority shall produce in respect of and in the United Kingdom the same legal effects as those which comparable decisions of the European Commission acting under the European Union State aid law provisions listed in Annex 8 to the Protocol produce within the European Union and its Member States.
Cooperation
With a view to ensuring consistent surveillance in the field of State aid throughout the single customs territory, the European Commission and the independent authority shall cooperate.
The European Commission and the independent authority shall:
- exchange information and views on the implementation, application and interpretation of the European Union State aid law provisions listed in Annex 8, and
- provide on a case-by-case basis information and exchange views on individual State aid cases which affect that trade between the parts of the single EU/UK customs territory.
The European Commission and the independent authority shall exchange this information taking into account the limitations imposed by the requirements of professional and business secrecy.
If the independent authority decides to open the procedure in relation to challenging unlawful state aid in respect of measures of the United Kingdom authorities that are subject to the above provisions in relation to the UK, the independent authority shall communicate that decision to the European Commission and give it the opportunity to submit its comments in accordance with the applicable time limits in the EU Regulation.
The independent authority shall consult the European Commission on all draft decisions it intends to adopt in accordance with the above state aid provisions. The European Commission shall have up to 3 months to communicate its opinion, and the independent authority shall take utmost account of that opinion before adopting the decision. In cases of urgency, the independent authority may invite the Commission to communicate its opinion as soon as possible.
Where the European Commission considers, during the period referred to above, that it requires further information before it can formulate its opinion, it may address a request for additional information to the independent authority. That period shall be suspended from the date of the European Commission’s request, and shall start afresh from the date of receipt of the independent authority’s response.
The independent authority shall not adopt the draft decision until the European Commission has communicated its opinion.
Courts and tribunals of the United Kingdom
Noting that the Court of Justice of the European Union has jurisdiction under the Treaties in respect of acts of the European Commission in the area of State aid, in respect of measures of the United Kingdom authorities that are subject to the above state aid provisions, the United Kingdom shall ensure that courts or tribunals in the United Kingdom are competent to:
- review and enforce compliance by the United Kingdom’s authorities with the obligation to notify and not to put a proposed measure in effect until the independent authority has authorised it;
- review the compliance of the decisions taken by the independent authority with the European Union State aid law provisions listed in Annex 8;
- review and enforce compliance with a decision of the independent authority by the United Kingdom’s authorities, and impose penalties in case of non-compliance;
- decide on actions for a failure of the independent authority to act, and order the independent authority to act; and
- decide on actions for private damages and award such damages.
The European Commission and interested parties shall have legal standing before courts or tribunals in the United Kingdom to bring such cases.T he European Commission shall have the right to intervene in such cases brought before courts or tribunals in the United Kingdom by the independent authority or any interested party.
Transparency
Without prejudice to the European Union State aid law provisions listed in Annex 8, the United Kingdom shall maintain a system of transparency of aid granted for individual State aid grants above EUR 500 000.
Consultations
If the European Union considers that the application or implementation by the United Kingdom of above state aid provisions threatens to seriously undermine the equal conditions of competition between the parts of the single customs territory, it may request a consultation within the Joint Committee with a view to finding a commonly acceptable solution.
The consultation shall take place on the basis of a written request that includes an explanation of the European Union’s reasons for requesting the consultation. A meeting of the Joint Committee shall be held within 30 days of the request.
If a commonly agreed solution has not been found in the Joint Committee within 30 days of the meeting of the Joint Committee referred to in paragraph 2, the European Union may adopt interim measures in accordance with following provisions.
Interim measures
The European Union shall be entitled, after giving notice to the United Kingdom, to take appropriate remedial measures above or where the European Union considers that the United Kingdom has failed to comply with its above state aid obligations and the European Union has commenced consultation in the Joint Committee in accordance with the Withdrawal Agreement, provided that the European Union considers that the United Kingdom’s failure to comply threatens to undermine the equal conditions of competition between the parts of the single customs territory;
In the above case, the appropriate remedial measures taken by the European Union may take effect at the earliest 30 days after the European Union has given the United Kingdom notice.
The appropriate remedial measures taken by the European Union shall cease to apply when:
- the European Union is satisfied that the risk to the equal conditions of competition between the parts of the single customs territory has been remedied; or
- in cases submitted to arbitration in accordance with the Withdrawal Agreement, the arbitration panel has decided that the United Kingdom has not failed to comply with its state obligations under this part
Coordination
The exercise of its powers by the independent authority in respect of measures of the United Kingdom authorities is without prejudice to the European Commission’s powers under the state provision to the Protocol
In particular:
- a decision by the independent authority shall not give rise to legitimate expectations under European Union law as regards the application of the Protocol;
- where the European Commission, acting under the Protocol, and the independent authority, take decisions concerning the same measure of the United Kingdom authorities, the decision of the independent authority is without prejudice to the legal effects in the United Kingdom of the decision of the European Commission pursuant to the Protocol.
Where the independent authority learns, by any means, of a measure by the United Kingdom authorities that may be subject to both the state aid provisions of the Protocol and the above state aid provision, it may informally consult the European Commission on whether the latter considers the measure in question to be subject the state aid provision in the protocol.
COMPETITION
Principles
The European Union and the United Kingdom recognise the importance of free and undistorted competition in their trade and investment relations. The European Union and the United Kingdom acknowledge that anti-competitive business practices, concentrations of undertakings and State interventions have the potential to distort the proper functioning of markets and undermine the benefits of trade liberalisation.
These provisions are without prejudice to the specific provisions applicable in the European Union to agricultural products in accordance with the EU treaties and equivalent laws, regulations and practices applicable in the United Kingdom.
Agreements between undertakings
The following shall be prohibited in so far as they may affect trade between the European Union and the United Kingdom: all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition, and in particular those which:
- directly or indirectly fix purchase or selling prices or any other trading conditions;
- limit or control production, markets, technical development or investment;
- share markets or sources of supply;
- apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
- make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
Any agreements or decisions prohibited pursuant to this Article shall automatically be void. These provisions may, however, be declared inapplicable in the case of:
- any agreement or category of agreements between undertakings,
- any decision or category of decisions by associations of undertakings,
- any concerted practice or category of concerted practices,
which contributes to improving the production or distribution of goods or to promoting technical or economic progress, which allows consumers a fair share of the resulting benefit, and which does not:
- impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;
- afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
Abuse of a dominant position
Any abuse by one or more undertakings of a dominant position in the territories of the European Union and the United Kingdom as a whole or in a substantial part thereof shall be prohibited, in so far as it may affect trade between the European Union and the United Kingdom.
Such abuse may, in particular, consist in:
- directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
- limiting production, markets or technical development to the prejudice of consumers;
- applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
- making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
Concentrations of undertakings
Concentrations between undertakings which are notifiable to the United Kingdom or the European Union or to one or more of its Member States and which threaten to significantly impede or to substantially lessen effective competition, in particular as a result of the creation or strengthening of a dominant position, shall be declared incompatible, in so far as they affect trade between the European Union and the United Kingdom, unless remedies are offered to address adequately the identified competition concerns.
Public undertakings, undertakings granted special or exclusive rights or privileges, and designated monopolies
In the case of public undertakings and undertakings to which the Member States or the United Kingdom grant special or exclusive rights, the European Union and the United Kingdom shall ensure that there are neither enacted nor maintained in force any measures contrary to the rules contained in the above paragraphs on competition.
Undertakings entrusted with the operation of services of general economic interest or having the character of revenue-producing monopoly shall be subject to the above competition rules, in so far as the application of those rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the European Union and the United Kingdom.
Interpretation
The European Union and the United Kingdom shall implement and apply the above provisions, in so far as they reflect concepts of European Union law, using as sources of interpretation the criteria arising from the application of the competition provisions on the EU Treaty as well as all relevant acts adopted by the institutions, bodies, offices or agencies of the European Union, including frameworks, guidelines, notices and other acts applicable in the European Union.
Implementation
The European Union and the United Kingdom shall take all appropriate measures to ensure that their respective competition rules address in an effective manner all of the practices set out above.In particular, the United Kingdom shall adopt or maintain a competition law which addresses, in an effective manner, all of those practices.The European Union and the United Kingdom shall enforce the rules in their respective territories.
The United Kingdom shall establish or maintain an operationally independent authority or authorities (“the independent authority”). The independent authority shall have the necessary guarantees of independence from political or other external influence and shall be able to perform its duties and exercise its powers impartially. It shall be appropriately equipped with all the powers and resources necessary for the full application and the effective enforcement of the competition law as above.
The United Kingdom shall apply the above competition law in a transparent and non-discriminatory manner, respecting the principles of procedural fairness and rights of defence of the undertakings concerned, irrespective of their nationality or ownership status.
Cooperation
In order to enhance effective competition enforcement, the European Union and the United Kingdom acknowledge that it is in their common interest to promote cooperation with regard to competition policy development and the investigation of antitrust and merger cases. For this purpose, the competition authorities of the European Union and the United Kingdom will endeavour to coordinate, where this is possible and appropriate, their enforcement activities relating to the same or related cases.
To facilitate the cooperation, the competition authorities of the European Union and the United Kingdom may exchange information. In implementing the objectives of this Article, the European Union and the United Kingdom, or the competition authorities of the European Union and the United Kingdom, may enter into a separate agreement or agree upon a separate framework on cooperation between the competition authorities.
Monitoring and dispute settlement
Noting that in the European Union effective enforcement is ensured by the Commission and the Court of Justice acting under the Treaties, the United Kingdom shall ensure effective enforcement of the competition provisions and shall not reduce the effectiveness of public and private enforcement of its competition laws, regulations and practices. In particular, the United Kingdom shall ensure that administrative and judicial proceedings are available in order to permit effective and timely action against violations, and provide for effective remedies, including interim measures, ensuring that any sanctions are effective, proportionate and dissuasive and have a real and deterrent effect.
The dispute resolution provision of the Withdrawal Agreement shall not apply in respect of disputes regarding the interpretation and application of the above provisions.
STATE-OWNED UNDERTAKING DESIGNATED MONOPOLIES etc.
Neutral regulation
The European Union and the United Kingdom shall respect and make best use of relevant international standards including, inter alia, the OECD Guidelines on Corporate Governance of State-Owned Undertakings.
Any regulatory body or function that is established or maintained in the European Union or the United Kingdom shall:
- be independent from and not accountable to any of the undertakings that it regulates in order to ensure the effectiveness of the regulatory function, and
- act impartially in like circumstances with respect to all undertakings that it regulates.
The European Union and the United Kingdom shall ensure the enforcement of laws and regulations in a consistent and non-discriminatory manner.
Procedures in relation to safeguard measures
Where the European Union or the United Kingdom is considering taking safeguard measures under the Protocol, it shall, without delay, notify the European Union or the United Kingdom, as the case may be, through the Joint Committee and shall provide all relevant information.
The European Union and the United Kingdom shall immediately enter into consultations in the Joint Committee with a view to finding a commonly acceptable solution.
The European Union or the United Kingdom, as the case may be, may not take safeguard measures until one month has elapsed after the date of notification under point 1, unless the consultation procedure under point 2 has been concluded before the expiration of the state limit. When exceptional circumstances requiring immediate action exclude prior examination, the European Union or the United Kingdom, as the case may be, may apply forthwith the protective measures strictly necessary to remedy the situation.
The European Union or the United Kingdom, as the case may be, shall, without delay, notify the measures taken to the Joint Committee and shall provide all relevant information.
The safeguard measures taken shall be the subject of consultations in the Joint Committee every three months from the date of their adoption with a view to their abolition before the date of expiry envisaged, or to the limitation of their scope of application. The European Union or the United Kingdom, as the case may be, may at any time request the Joint Committee to review such measures.
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