Brexit – Possible impact on people, taxes and law

Brexit is the dominant international topic in Great Britain. On this page, we have compiled an overview of the potential implications for individuals, tax law and company law from a German perspective as a showcase, mostly as regulations that would be dropped (without separate agreements or treaties) after Brexit.


  • EU freedom of movement of persons will no longer exist with regard to Great Britain. The future conditions for EU citizens to remain, enter and leave the country are currently unclear.
  • At present, social security for international employment relationships is regulated by an EU directive, also with regard to the attribution of an acquired entitlement to the home country or acquisition of a separate entitlement in the country of assignment. Since the EU directive would no longer apply after Brexit, separate agreements are necessary.

Tax law 

  • EU Parent-Subsidiary Directive (implemented in sectiopn 43b EStG) on withholding tax exemption for dividends between companies
  • Interest and Royalty Directive of the EU (implemented in sectiopn 50g EStG) on withholding tax exemption of interest and royalties
  • Merger Directive (implemented in the UmwStG) on the tax-neutral restructuring of companies; it is currently unclear whether the geographical scope of the UmwStG itself (EEA territory) with regard to Great Britain will apply to future transformations
  • Directives on mutual assistance and recovery and with regard to the Anti-BEPS Directive (Anti-Tax Avoidance Directive, ATAD)
  • Additional taxation according to the German AStG: if Great Britain is no longer part of the EU, companies can no longer claim the exemption of sectiopn 8 para. 2 AStG, as Great Britain would now be a third country
  • A deferral of the withdrawal tax pursuant to Section 4g EStG by transferring assets to a British permanent establishment would no longer be possible. With regard to the case of sectiopn 36 para. 5 EStG, the cross-border transfer of a business, a departure from Great Britain cannot be interpreted as an act of further transfer.
  • Deferral of departure taxation pursuant to sectiopn 6 para. 5 sentence 1 AStG in the event of a change of residence no longer applies
  • A British family foundation could no longer use the proof of discharge in accordance with Section 15 (1) AStG in order to avoid additional taxation in accordance with Section 15 (1) AStG
  • Trade tax nesting privilege, sectiopn 9 para. 7 GewStG, which means that under certain conditions, dividends paid abroad within the EU are reduced for trade tax purposes
  • If the registered office of a corporation is transferred to a third country, it is deemed to be dissolved (sectiopn12 (3) KStG)
  • In the case of a fiscal unity pursuant to Section 14 (1) KStG, a controlled company may have its registered office in another EU/EEA country, but in future no longer in Great Britain.
  • Uncertainty as to whether the tax-neutral refund of deposits under Section 27 (8) of the German Corporation Tax Act (KStG) still applies to a UK subsidiary after Brexit
  • After leaving the EU, a British company would no longer fulfil the requirements of sectiopn 1 sub-section 4 UmwStG and would therefore be subject to retrospective taxation of the contribution profit in cases of transformation under sectiopn 20 UmwStG<
  • Exemption from real estate transfer tax under Section 6a of the German Real Estate Transfer Tax Act (GrEStG) in cases of restructuring within a group of companies, provided that Great Britain leaves both the EU and the EEA
  • VAT: Great Britain would move from a member state to a third country; thus, all supply chains from, to and through Great Britain would be affected with regard to the assessment of the taxability of a service and documentation requirements


Corporate and commercial law

  • A European Company (Societas Europaea, SE) could no longer have its registered office in the United Kingdom
  • Companies that have moved from the EU/EEA area by transferring their administrative headquarters are recognised in their legal form. If Great Britain were no longer a member of the EU or EEA (and no separate agreement were to be concluded), British companies would be judged according to the seat theory, i.e. according to German company law, and would thus entail consequences such as compulsory changes of legal form with disclosure of hidden reserves
  • Newly concluded commercial contracts now also take into account clauses on future area of application, taxes and customs duties as well as clauses in the event of a significant adverse change in the legal situation or renegotiation due to unforeseen changes in circumstances
  • The nature and scope of future protection of patents, designs and trademarks based on an EU registration is currently unclear

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