The Irish Government has published the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019 (‘Omnibus Bill’), which deals with changes to Irish laws that will be needed to minimize disruption to cross-border commercial activities in the event of the UK leaving the EU without an agreement on 29 March 2019.
This seismic piece of legislation crosses the remit of nine Irish Government Ministers, and is made up of 15 sections to prepare Ireland for a disorderly Brexit.
The Irish Government asserts that the Omnibus Bill focuses on protecting Irish citizens, supporting businesses and jobs, and securing ongoing access to essential services and products.
Commenting on the proposed legislation, the Taoiseach (Irish Prime Minister) Leo Varadkar said:
“Our focus remains on the UK ratifying the Withdrawal Agreement, which was concluded following intensive negotiations between the UK and the EU. However, for the last two years we have also been preparing for the possibility that the UK leaves the EU without an agreement. We are doing all we can to avoid a no deal scenario, but we need to be ready in case it does happen. This special law enables us to mitigate against some of the worst effects of no deal by protecting citizens’ rights, security, and facilitating extra supports for vulnerable businesses and employers.”
The Omnibus Bill is intended to be consistent with, and complementary to the steps currently underway at EU level to prepare for the UK’s withdrawal, notably as regards the implementation of the European Commission’s Contingency Action Plan and the associated legislative measures.
A no deal Brexit means that the UK would no longer be part of the framework of EU law, becoming a ‘third country’, and outside the Single Market and Customs Union. A number of proposed measures are focused on the need to address this change in the UK’s status.
Protecting the Good Friday Agreement in all its parts, supporting North-South cooperation and the all island economy, are key underpinnings to the Government’s approach in a number of provisions of the Omnibus Bill.
In addition, a key part of Ireland’s planning and preparations is protecting and maintaining the Common Travel Area (CTA) and the associated rights and privileges. Both the Irish and British Governments are committed to maintaining the CTA in all circumstances, and have committed to undertaking all the work necessary, including through legislative provision, to ensure that the CTA rights and privileges are protected.
The Omnibus Bill prioritizes those issues that need to be addressed urgently and immediately through primary legislation at national level. Many other issues continue to be addressed at a national level, through secondary legislation, policy and economic responses, on an administrative basis and through targeted Brexit related resources, as well as at EU level.
In respect of certain legislative measures being dealt with at EU level, negotiations are ongoing.
Some of the key proposals are outlined below.
In order to support the maintenance of existing Common Travel Area arrangements, the Omnibus Bill gives the Minister for Health the power to make an Order, or Orders, and Regulations under the Omnibus Bill to enable necessary healthcare arrangements to be maintained between Ireland and the UK. This includes continuing existing arrangements in relation to health services which are currently in operation between the State and the UK, for example, access to health services in the UK for persons in the State, access to health services in the State by persons from the UK, and reimbursement arrangements. Such an Order may specify the category of persons to whom the Order applies and the category of health services to which it applies.
The Omnibus Bill will allow the Commission for the Regulation of Utilities to amend the licences of electricity market participants for a period of one year, without recourse to the normal modification and appeal process of the Electricity Regulation Act 1999 for the purpose of modifying licences in an expeditious manner, to facilitate the continuing operation of the Single Electricity Market.
Publicly funded higher education institutions in all extant Member States are recognised. The Omnibus Bill allows for the recognition of institutions in a prescribed third country such as the UK after their departure from the EU
With regard to the recognition of qualifications awarded following the successful completion of an approved course, these are limited to recognition within the State or another Member State, an amendment is included in the Omnibus Bill to cover arrangements, systems and procedures in a prescribed third country such as the UK after their departure from the European Union.
A priority of the Omnibus Bill is to amend various sections of the Taxes Consolidation Act (TCA) 1997, to seek to ensure that income tax measures continue to apply to existing beneficiaries in the event that the UK is no longer an EU Member State or EEA State.
This includes changes to measures dealing with: income tax exemption for interest payable on savings certificates or similar securities issued by the UK Government; abatement from income tax on restricted shares; the Key Employee Engagement Programme; taxation treatment of Hepatitis C compensation payments; Foster Care; exemption of certain earnings of writers, composers and artists; tax exemptions for charities; mortgage interest relief; relief for insurance against expenses of illness; Seafarer Allowance; Fishers Tax Credit; relief for fees paid for third level undergraduate education; sportspersons’ relief; relief for investments in corporate trades; pensionrelated income tax reliefs; and, anti-avoidance provisions. The Omnibus Bill extends relevant legislative definitions to include the UK in order to allow for the continuation of existing arrangements in the immediate future for beneficiaries of the measures.
The Omnibus Bill further concerns charges on income for corporation tax purposes and will amend Taxes Consolidation Act 1997 Section 243(4) to include banks, stock exchanges and discount houses in the UK. If the UK leaves the EU without a deal, a company would not be able to avail of relief from corporation tax under section 243 in respect of non-yearly interest paid to recognized banks, stock exchange members or discount houses carrying on business in the UK. It is proposed to extend the references to include the UK to allow for the continuation of existing arrangements in the immediate future.
A further section of the Omnibus Bill provides relief from capital gains tax for fund managers in respect of investments of a venture capital fund. The Taxes Consolidation Act 1997 will be amended so that investments made in the UK can be taken into account in the calculation of the amount of the relief.
The Omnibus Bill will introduce a new Section 53A of the VAT Consolidation Act. This change introduces postponed accounting for VAT for all importers registered for VAT in Ireland. It also introduces a modification of the postponed accounting scheme at a later date, to be agreed, which will make authorization for the scheme subject to criteria and conditions.
The Omnibus Bill provides for the temporary designation of settlement systems already designated by the Bank of England under their domestic Settlement Finality legislation. Within three months of a UK withdrawal from the EU, the operator of a relevant arrangement must notify the Minister and Central Bank of Ireland of its intention to avail of temporary designation up to a maximum period of nine months after that date. This will allow the protection of the Settlement Finality Regulations (SI 624/2010) to be extended to Irish participants of UK systems for the time period specified or until they have acquired designation under Section 63.
Section 63 provides for the Minister of Finance to designate a UK-based system (“relevant arrangement”) for the purposes of the Settlement Finality Regulations (SI 624/2010). This will extend the protections of the regulations to Irish firms in the UK. The legislation protects payments and transfers of securities made by Irish participants by ensuring that trades entered into a system fully settle even if one of the participants attempts to revoke the trade or becomes insolvent. This will be required for Irish firms to continue using systems in the UK when it becomes a third country. The Central Bank of Ireland is required to carry out a technical equivalence assessment of the UK national laws governing the system for its equivalence with relevant Irish laws and an assessment of the rules of the system itself to ensure its compliance with the conditions set out in Regulation 7 of the Irish Settlement Finality Regulations (SI 624/2010).
Section 66 of the Omnibus Bill adds a new regulation to the European Union (Insurance and Reinsurance) Regulations 2015 that will establish a temporary domestic runoff regime for certain insurance undertakings for three years. In that respect, it provides that insurance undertakings which meet certain conditions shall be deemed to be authorised for three years following the withdrawal.
The Omnibus Bill will amend the Immigration Act 1999 and Immigration Act 2003 to confirm that immigration officers, in considering removing or deporting a person from the State, have, in line with EU and international obligations, the power to undertake a refoulement consideration and provides a legal basis for taking fingerprints of Irish visa and Irish transit visa applicants, to enable the continuance of the British-Irish Visa Scheme, pursuant to Common Travel Area arrangements.
The magic wand solution, proposed by the Irish Government, is to ostensibly define the UK as a Member State during any transitional period, so that it will effectively continue to be treated as a union member.
The Omnibus Bill provides that the term ‘Member State’ where used in any enactment shall be interpreted as including the UK for the duration of any transition period created by an agreement on the withdrawal of the UK concluded under Article 50 of the Treaty on European Union, should such an agreement enter into force.
Harry Houdini once said, “What the eyes see and the ears hear, the mind believes.” That a single piece of legislation will prevent the social and commercial disruption that will inevitably arise between these islands in the event of a no deal Brexit, needs to be seen to be believed.