Are you a fan of Great Britain or are you even a British citizen? Are you active in the payment industry? Are you afraid of a hard Brexit? Great, then we’ve got something for you. On 21/02/2019, the German Bundestag adopted the Act on Tax and Other Accompanying Measures for the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union (Brexit Tax Accompanying Act, Brexit TAA). If this Act enters into force without any amendments, we will have a softener for British payment service providers in Germany in the case of a hard Brexit.
Transition period for British payment service providers
Under the Brexit TAA, British payment service providers will continue to be able to use the EU passport in Germany under certain conditions. In other words, British payment service providers may continue to provide payment services in Germany even after a Brexit.
Conditions for the transition period
Before you crack open the champagne bottles and raise your glass to Europe, you should read on as there are a few catches:
Catch 1: The transition period only applies to Germany. This means that the transition period only applies to the business British payment service providers carry out in Germany. It remains to be seen if other countries follow the German example.
Catch 2: The transition period applies for a maximum of 21 months. After this period, British payment service providers would no longer be able to rely on the EU passport.
Catch 3: The transition period does not automatically apply. It needs to be ordered by BaFin. BaFin’s decision to that effect has to be necessary to avoid disadvantages regarding the functionality or the stability of the payment transaction markets. However, the German Federal Government has made it clear in the explanatory memorandum to the Act that this requirement does not have to be interpreted too strictly.
Catch 4: The transition period only applies to existing customers. Genuine new business is not permitted during this transition period.
After Brexit is before Brexit
The transition period passed by the German Bundestag is therefore little more than clutching at straws for British payment service providers who it seems, are only just realising that there will be a Brexit. The Brexit TAA is not and was not intended to be a permanent solution. At least it seems as if one of the secrets has been revealed in the area of payment transactions, which the great Ephraim Kishon once phrased like this:
The greatest secret of the English is why they don’t emigrate.
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