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Brexit Update: Key points for the digital sector

ScotlandIS were pleased that the UK and EU were able to agree a new trade and cooperation agreement on December 30th, 2020. Since 2016, ScotlandIS have worked closely with the UK Government to ensure that the digital and tech sector in Scotland continues to grow, innovate and trade. We strongly opposed a no-deal Brexit, and we were pleased that a deal was secured for the growth and prosperity of our thriving sector.

Important commitments include maintaining zero custom duties on electronic transmissions; keeping source code safe; protecting consumers online; and providing a legal framework for common e-signature and trust services.  The Brexit deal seeks to reflect regulatory best practice in areas such as e-contracts and consumer protection. As part of this, the UK have agreed new provisions to facilitate the cross-border flow of data by prohibiting requirements to store or process data in a specific location. This prevents the imposition of costly requirements for British businesses. The agreement confirms data protection commitments by both the UK and the EU – the first time the EU has agreed text on data in a free trade agreement – which protects consumers, helps to promote trust in the digital economy, and continues to uphold the UK’s high data protection standards.

Below are some key points to consider for our members and their respective organisations.

Data Adequacy

The transfer of personal data between the UK and EU is no longer allowed by default due to the UK’s departure from the EU. ScotlandIS have held a number of roundtables on the importance of data adequacy and we continue to lobby the UK Government to find a resolution to this.

During the transition period the UK was being assessed to determine if UK data protection laws offer an equivalent level of protection to the EU’s own. If this is deemed adequate, then personal data can continue to be transferred without taking extra steps beyond complying with the data protection laws of the jurisdiction the company is based in.

Currently, there is a six-month bridge period to allow for the completion of a UK adequacy decision. During this period data can flow as it did when the UK was an EU member. If this should change, we will update members accordingly.

Electronic contracts and documentation

The UK-EU TCA gives equal treatment to electronic signatures and electronic documents versus paper-based documents. This includes a wide range of legal services and provisions that take place between EU and UK counterparts.

There are a few exemptions which can be found in the digital trade chapter.

Cyber security

The UK-EU TCA lays the foundations for continued collaboration between the UK and the EU in the field of Cyber Security. ScotlandIS have a number of key strategic European partnerships formed within our Cyber Cluster and we look forward to maintaining these moving forward.

One of the leading Cyber Security groups in the EU, The European Union Agency for Cybersecurity (ENISA) has also agreed for continued UK participation. The UK can continue to contribute to work on countering cyber attacks, on critical infrastructure, elections, or working to leverage the collective weight of like- minded European countries to counter terrorism, for example.

Nonetheless, the UK will perhaps not have the same involvement in EU cyber security policy, nor in the growing industrial policy strand linked to cyber. However, the EU will miss out on the kind of contribution, practical and on policy, that the UK has made to date. The foundations are in place for this relationship to remain fruitful if both parties continue to collaborate.

Migration Policy

The end of freedom of movement also means a change to current and existing migration policy.

Travel and movement

The UK-EU TCA allows visa-free travel, including for work, for up to 90 days in any 180-day period.

The agreement also contains a number of permitted activities that will not require a visa or economic needs test. The list of permitted activities covers things like meetings and conferences for example. Having engaged closely with our members on this matter, these were two key areas that cropped up and we highlighted to UK Government.

You can view further guidance here which includes country-by-country guides regarding travel and movement, depending on which country is of most interest to our members’ business.

Recruiting from outside of the UK

Any companies looking to recruit workers from outside of the UK must obtain a sponsor licence and meet certain criteria. This does not apply to EEA or Swiss citizens already employed in the UK, or already living in the UK by December 31st 2020.

You can read more guidance on this topic, which also details policy for intra-company transfers, where you wish to transfer an employee from part of your business overseas to work for you in the UK.

Student programmes and attracting talent

ScotlandIS and our members are passionate about academic excellence in the digital and tech sector. Some of our members had expressed concern over the future of pan-European collaboration moving forward. The UK will continue to engage in a number of EU programmes which include Horizon Europe, Euratom Research and Training, and Copernicus.

The UK will no longer take part in Erasmus +, but has launched a new Turing Scheme which will support student exchanges. The Turing Scheme is aimed at looking towards an international focus, with integration from Europe too.

Other routes, such as The Global Talent route (designed to attract recognised global leaders and promising individuals in certain sectors including digital technology) and the Youth Mobility Scheme (enabling around 20,000 18 to 30 year olds to come to the UK to work and travel each year) are ‘unsponsored’ and therefore do not require a sponsored visa. You can view these and many other routes here.

Fintech-Financial Services

The Treasury has given UK financial regulators the power to make temporary transitional provisions in relation to financial services legislation, known as the temporary transitional power (TTP).

The TTP will apply on a broad basis from the end of the transition period until 31 March 2022, allowing firms and other regulated persons to continue to comply with existing requirements for a limited period.

However, there are some areas where the TTP doesn’t apply, for example use of credit ratings for regulatory purposes. View more details on this guidance here.

Currently, the UK-EU TCA has very little in the way of financial service agreements. ScotlandIS have highlighted a lack of detail in this area to the UK Government, as the tech start-up community in particular have expressed concern over how this will effect sustainable capital growth and funding.

ScotlandIS will continue to work closely with our members to highlight their needs and concerns to the UK Government.

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