BUSINESS NEWS ld prepare for possible hard exit PTD compliance and consumer awareness facing the sector if the UK leaves the EU without a deal


consequence, insolvency protection arrangements made in the UK will no longer be recognised by other EU regulators. So what must travel companies do?


Options for PTD compliance Te default position is that UK companies must arrange insolvency protection in accordance with the rules of each EU market they sell into. Tis means a guarantee as


determined by the Kammarkollegiet for sales in Sweden, a separate guarantee as determined by the Rejsegarantifonden for sales in Denmark, a CAR licence (or one of the permited alternative options) for sales in Ireland, and so on. Clearly, seting up these separate


arrangements is unatractive for a company selling into various EU markets given the time and expense involved. Yet this has remained an atractive


(or the least bad) option for many because it allows a company’s headquarters to remain in the UK. However, there are some


unwelcome exceptions to this general rule. Some markets, such as Sweden,


will only allow travel companies to join their scheme if they have first created a local branch or subsidiary in Sweden. Tis can bring tax liabilities in the local market, undermining one of the major benefits of this option. An alternative option, and an


atractive one from a regulatory perspective, is to create an ‘EU hub’ – such as an EU place of establishment – and use the insolvency protection arrangements of the place of establishment to sell into all EU markets. Te trouble with this option


travelweekly.co.uk Upon a ‘hard’ Brexit, the UK will become a


‘third country’ for the purposes of the PTD. As a consequence, UK insolvency protection arrangements will no longer be recognised by other EU regulators


is that a ‘place of establishment’ requires a real presence, ie an office and people. Te rules are clear that a post box will not be enough. Tere are structural ways in


which the size of the footprint can be minimised, but a real footprint of some sort is still required. Tese options are both workable


for UK-based travel companies looking for a way to continue selling to EU-based consumers aſter a hard Brexit. However, the reality is that both


these solutions take time to set up and implement. Tere are also broader challenges.


Aside from the need to comply with travel regulations, there are similar


cross-border issues in relation to selling travel insurance or transferring customer data. Ten there are practical risks to


manage: travel disruption, exchange- rate volatility and the right of employees to work in the UK and overseas, to name but a few.


What should travel businesses be doing? Given the risk of a hard Brexit, travel businesses should be geting ready for it. From a legal, regulatory and


practical perspective, the first step is to understand how Brexit might affect a business so that steps can be taken to address the risks.


Ursula von der Leyen, president-elect of the European Commission


Tese steps take time to


implement, so the sooner one gets going the beter. Finally, in preparing for Brexit,


let us not forget the customer. Holidaymakers will need to do their part for a holiday to continue smoothly following a no-deal Brexit. Are customers aware of the new


requirements concerning passport validity, international driving permits, insurance green cards, and so on? Such crucial details are probably


not as widely understood as they should be, not least because information is not easy to find and digest. Grasping the detail on these


issues is likely to be important if businesses are to inform and reassure customers as we head towards Halloween.


Rhys Griffiths, Fox Williams: rgriffiths@foxwilliams.com


19 SEPTEMBER 2019 87


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