Deal or no deal, the impact of Brexit will be felt across all sectors of the UK economy. At the point of writing many of the key decisions are still to be decided but for now, some of the key impacts that will affect the screen sector are summarised below.
What will happen to tax reliefs?
The UK’s Creative Sector Tax Reliefs will not be affected by Brexit.
Some minor changes will be required if UK content and personnel are to continue to contribute to qualification for incentives in some EU Member States after the end of the transition period. The UK Government is aware of this issue and will work to ensure that wherever possible Member States undertake the work needed to ensure UK content and personnel can still qualify.
Will this affect UK immigration rules for EU/EEA personnel?
The freedom of movement of EEA citizens entering the UK will cease after the end of the transition period on 31 December 2020.
The UK Government has set out plans for a points-based immigration system to be introduced from January 2021 after freedom of movement ends. This will be applicable to both EEA and non-EEA nationals. More detail is required, but policy statements as of July 2020 have confirmed that:
- Those moving to the UK for permanent employment, such as many VFX roles, must have a job offer in a high-skilled profession and must be able to speak English. They must then reach a ‘points’ threshold via a combination of salary level (which must always be above £20,480), level of qualification and whether they are working in an occupation with recognised skills shortages.
- Employers in the screen sectors will be required to pay an immigration skill charge as well as an NHS surcharge to bring these workers in. The current cap on places for this route will be removed.
- Those moving to the UK for temporary work (such as to join a film or HETV production) must adhere to the tier 5 (creative and sporting) visa system currently in place for non-EEA nationals. This requires a job offer from a recognised sponsor. However, if the UK treats EEA citizens as ‘non-visa nationals’ as expected (see below), they will be able to travel to the UK to work for up to three months without a visa if other documentation is provided. The UK also allows those coming to the UK to shoot on location for an overseas production to enter without a visa for limited periods of time. More information on the current structure of tier 5 visas is available here.
- A very small number of industry leaders will be able to move to the UK through a Global Talent route, if they can evidence exceptional contribution.
The Government has announced plans to open application systems in Autumn 2020 so that people can begin applying ahead of the change of system. Further information on how the new points-based system will work can be found here and practical information for employers is available here.
There are separate arrangements for movement of people between the UK and the Republic of Ireland under the Common Travel Area and there may also be specific arrangements for individual countries with which the UK has negotiated a free trade agreement.
Will UK productions still be considered European Works?
Works originating from the UK will still be considered European works for the quotas set out in the European Union Audiovisual Media Services Directive (AVMSD) even after the end of the transition period. This has been confirmed by both the UK Government and the European Commission. This is because the AVMSD rules concerning the definition of European works state that a work can qualify if the work originates in a European third State party to the European Convention on Transfrontier Television (ECTT) of the Council of Europe. The UK is party to the ECTT and will continue to be a party to it once the UK leaves the EU.
The UK Department for Digital, Culture, Media and Sport consulted on the implementation in the UK of the revised AVMSD which was agreed by the EU in 2018. It includes a 30% quota for European works on VoD services. The provisions of this Directive will enter into force in the UK on 1 November 2020.
Will Brexit affect co-production arrangements?
All co-production agreements including the bi-lateral co-production treaties and the European Convention on Cinematographic Co-Production signed by the UK will remain in place after Brexit. The European Convention on Cinematographic Co-Production is governed by the Council of Europe, not the European Union, and the UK will continue to be a party to the Convention. In addition, on 7 February 2019 the UK Government officially signed the revised Convention which confers added flexibility on UK producers and their international partners whose countries are signatories. This demonstrates the UK’s strong commitment to continue working with Europe and other international territories.
The UK’s bi-lateral treaties with Australia, Brazil, Canada, China, France, India, Israel, Jamaica, Morocco, New Zealand, Occupied Palestinian Territories and South Africa form part of UK legislation and therefore are not affected by Brexit.
The British Film Institute will continue to issue European Certificates of Nationality.
How will VAT and Customs on importing and exporting goods and services be affected by Brexit?
There will be fundamental changes to the VAT and Customs reporting required from 1 January 2021. The UK will, as matters stand, no longer be part of the common VAT or Customs systems of the EU. What this means is that goods entering or leaving the UK for the EU will be subject to Customs controls and additional reporting requirements.
Those importing and exporting goods should ensure that they, as minimum, have:
- an EORI number (possibly two if one is required for the EU as well as the UK),
- applied for deferment account if import duty will be due,
- considered whether to defer reporting of imports from the EU for 6 months,
- considered appointing an agent to deal with import and export matters,
- considered what rate of duty will apply to imports,
- considered whether any customs reliefs, such as temporary admission of goods relief, and
- considered VAT reporting changes including postponed import VAT accounting
Will there be changes to the rules for importing and exporting equipment into the EU for film and television production
Under the terms of the Withdrawal Agreement, movement of goods will continue as normal throughout the transition period, up to 31 December 2020. Beyond this, the terms of movement will be subject to the outcome of the current trade negotiations between the UK and the EU. However, the UK’s border operating model document indicates that the current proposals will apply and businesses should therefore by using this as the likely roadmap.
The Political Declaration on the future relationship between the UK and the EU recognised the importance of temporary movement of objects and equipment for ongoing cultural cooperation. It sets out plans to develop the smoothest possible arrangement for the movement of goods between the two, while recognising the importance of checks after the UK leaves the single market. For example, the EU’s Economic Partnership Agreement with Japan, which entered into force in February 2019, makes special provision for the temporary movement of cinematographic equipment.
The precise legal framework that will apply to the transfer of equipment between the UK and EU is subject to the terms of any agreement reached between the UK and EU concerning their long-term relationship. This is still subject to negotiations, at the time of writing.
What will happen to EU citizens living in the UK?
The Withdrawal Agreement guarantees the rights of EU citizens resident in the UK by the end of the transition period. EU citizens that have lived in the UK for five years or more are eligible to apply for ‘settled status’, allowing them to stay in the UK permanently. Anyone that has not been in the UK for the requisite five years may apply for pre-settled status, allowing them to remain in the UK until they have reached the five years required to apply for settled status. The deadline for applications for either settled or pre-settled status is 30 June 2021.
Further detail on how to apply for the EU settlement scheme is available here.
Will there be special rules in relation to Northern Ireland?
Under the Northern Ireland Protocol, which forms part of the Withdrawal Agreement, there will be special rules for the movement of goods between Great Britain and Northern Ireland. The details of these are being finalised by the UK and the EU.
The UK Government has stated its intention to ensure that businesses will be able to move goods from Northern Ireland to Great Britain on the same basis as now. But there will be some additional requirements governing the movement of goods from Great Britain to Northern Ireland.
The purpose of these additional requirements is to avoid the need for customs checks between Northern Ireland and the Republic of Ireland, so it is not anticipated that there will be additional requirements for goods crossing that border.
Will the Creative Europe programme continue to be available?
Following the publication of the Government’s EU negotiating mandate on 27 February 2020, it became clear that the UK will not be seeking to participate in the next Creative Europe MEDIA programme which is due to start in January 2021.
The UK will continue to participate in the Creative Europe programme under the terms of the Withdrawal Agreement until 31 December 2020, and UK projects that have already secured funding will continue to receive it, even where that activity is set to take place after December 2020.
However, all deadlines for MEDIA sub-programme schemes for which UK companies were eligible have now passed and any future funding deadlines will fall under the new programme, for which the UK is not directly eligible. UK films, however, are still eligible for awards made to European distributors and sales agents under the calls published as part of the current programme.
While the UK’s direct access to funding comes to an end this year, there are many international training courses and industry initiatives funded by the programme that will remain open to UK participants under the new programme from 2021 to 2027.
The Government is currently investigating what a domestic alternative to the Creative Europe programme could look like.
If you would like to discuss how Brexit impacts your business, then do please get in touch.