On the 24th December 2020, just before the lapse of the transition period, the UK and EU successfully reached a trade deal, the Trade and Cooperation Agreement. The Brexit deal has left a great deal of uncertainties, particularly in relation to financial services matters, which may lead to significant implications for the financial services sector vis a vis the UK and the rest of the EU.
The pan-European passport, which paved the way for automatic access to the single market and the offering of financial services in the EU, is now a major concern. By virtue of the Brexit deal, UK-based entities will no longer be able to provide cross-border services to EU customers or establish branches in Member States as an expression of freedom of establishment. Thus, UK entities will either have to continue providing services as a branch of a third country or through a subsidiary in a Member State holding the necessary authorisation in that Member State.
Malta, as a European regulated jurisdiction, offers several advantages and may also serve as an alternative financial centre of choice for entities operating from the UK, following Brexit, in order to continue accessing the EU financial market. Malta's robust financial services regime, particularly in relation to Investment Firms, Banking Institutions, Insurance undertakings, amongst others, and its positive reputation in the financial services industry, its long-standing relationship with the UK throughout the years and Malta's tax regime, present an attractive solution for these entities.
DF Advocates are closely monitoring developments and have been approached and engaged to assist a number of clients in this regard.
Originally Published by DF Advocates, January 2021
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