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How Brexit has affected the export of financial services to the EU

Now that the EU transition period has ended and Brexit is in full force, many companies have had to adjust. While a great deal of focus has been placed on importing and exporting physical goods, businesses must consider the impact on services too. This includes financial services sold from the UK to the EU.

As a cornerstone of the UK economy, financial providers must still be able to offer their services to their EU clients. This means understanding the new regulatory landscape. This will enable the UK and EU relationship to continue in this area, with the UK exporting over £20 billion worth of services to the EU every year.

In our guide, we have explored how the financial services industry has been affected by Brexit and what you must do to overcome the barriers.

Passporting rights

Without passporting rights, trading in the EU can be complex and expensive. Passporting rights allow a financial services provider regulated in one country to provide cross-border services to other countries in the trade bloc without the need to implement additional regulatory measures or incurring extra costs.

Before Brexit, businesses in EU countries could obtain funding from UK financial institutions because the passporting system allowed them access to an integrated banking service of a UK-based bank.

Despite the Trade and Co-operation Agreement negotiated between the EU and UK, UK firms lost their passporting rights when the transition period ended on 31st December 2020. This means that, to export services, UK providers must follow the requirements of the EU member state they are supplying to or rely on an equivalence decision.

It is worth noting that the removal of passporting frameworks will make life more complicated for firms. Even if they look to negotiate licensing agreements separately with each country, this could prove complex and costly – not to mention the fact that these licenses are not available in all EU countries.


Before Brexit, the Department for Exiting the European Union published a letter from John Glen MP to the chair of the House of Lords European Union Committee Lord Kinnoull stating that ‘a deep and comprehensive future relationship with the EU remains the best way to further shared goals.’ One of the goals was to maintain the financial stability of the equivalence framework to ‘ensure strong ties to preserve market integration, financial stability and investor protection’.

Since Brexit, the UK government has granted equivalence to set EEA-based financial services, including credit rating agencies. On the other side, the EU has given time-limited equivalence decisions only for derivatives clearing (for 18 months) and settling Irish securities (for six months).

Although equivalence does not form part of the UK-EU TCA, it is hoped that this agreement will make it easier for UK financial firms to receive favourable equivalence decisions.

It is worth noting that equivalence does not provide the exact same cover as passporting rights. Some financial areas, such as lending, payments and deposits are excluded, so there may still be answers needed.


Another factor to consider when exporting financial services is VAT. Your services may require VAT in the member state you are importing to, so be sure to check this. If you supply digital services to consumers via a third party (such as a digital platform or marketplace), the third party should take care of VAT on your behalf.

You will need to be registered in the relevant country for VAT. You need to register for VAT in every country that you will supply services for, using the Non-Union VAT MOSS scheme.

When providing financial services to another business, you will need their VAT registration number to account for VAT. If the service is going to a consumer, you will need to charge them VAT based on the rules for the country they live in (otherwise known as the ‘place of supply’).

If you are exporting to Northern Ireland, you need to follow standard UK VAT rules, as they continue to align to GB regulations on this point.

Professional qualifications

Finance is a regulated industry. As such, you need valid professional qualifications.

Following Brexit, if you provide regulated services, you must ensure the appropriate regulator approves your qualifications in the country you are selling to. Previously recognised qualifications remain valid.

Under the trade agreement, the EU and UK can submit joint recommendations to the UK-EU Partnership Council for profession-specific arrangements. These arrangements could enable UK professionals to have their qualifications recognised in the EU (and EU professionals in the UK). However, these arrangements have not yet been approved, so you should follow government advice regarding your qualifications in the meantime.

What you can do

Regardless of the challenge you face, the best thing you can do is arm yourself with as much information as possible. If you are looking to provide financial services, this means understanding what has changed and ensuring you comply with the new regulation.

If you need advice, we are here to help. Our team of advisors has expertise across various business topics, including finance, trade, employment, and regulation. We can provide tailored guidance to your unique needs, helping you to surpass the obstacles in your business.

Get in touch today to book your advisory session.