Mutual recognition of professional qualifications with the EU is at an end, so what next?
When the Brexit transition period ended on 1 January 2021, trading with the EU switched to the rules outlined in the Free Trade Agreement announced on Christmas Eve last year. The focus of that deal was the movement of goods across borders, but not services. The automatic mutual recognition of professional qualifications was not included in the agreement.
What does this mean for your right to work in the EU? The short answer is that it depends on what sort of work you’re doing, and the country you’re looking to work in. There are still some grey areas that will become clearer as time goes on, but here are the key points you need to know.
Brexit – webinar resources
If you’re in industry, it shouldn’t make a difference
Speaking to a finance professional working for a manufacturing company based in the Netherlands, it seems that for accountants in industry, the lack of mutual recognition is not really a problem: “They didn’t hire me for my qualifications, so they’re irrelevant,” he says. If you want to work in industry in Europe, your experience is more important.
If you’re based in the UK and providing services to EU companies, it’s more complicated
The provisions for services trade between the UK and the EU are lacking at the moment. “While services provisions have been included, they do not go much beyond existing EU practice, and notable barriers will limit the scope of many services providers to trade between the EU and the UK,” says EY’s Brexit strategy and trade leader Sally Jones. This is where the end of the mutual recognition of professional qualifications can become a barrier. There are also “significant carve outs’ from the EU regarding the extent to which it commits to allowing UK service providers to access their EU customers.”
This could have an impact on UK firms and practices that serve EU-based clients.
The requirements for six nations are outlined in the agreement.
Austria: Capital interests and voting rights of qualified foreign accountants and bookkeepers in an Austrian enterprise may not exceed 25%. The service supplier must have an office or professional seat in the EEA.
France: Establishment or residency in the country is required to provide accounting and bookkeeping services. Those services can be provided to most companies, bar except SNC (Société en nom collectif) and SCS (Société en commandite simple). Specific conditions apply to the following company types: SEL (sociétés d’exercice libéral), AGC (Association de gestion et comptabilité) and SPE (Société pluriprofessionnelle d’exercice).
Italy: You need to be resident or have your business domicile to enrol on the Italian professional register, which you must do if you’re to offer accounting and bookkeeping services.
Portugal: Like in Italy, residence or business domicile in Portugal is required for enrolment in the professional register by the Chamber of Certified Accountants (Ordem dos Contabilistas Certificados), which is necessary for the provision of accounting services. This only applies if there is reciprocal treatment for Portuguese nationals.
Cyprus: Access is restricted to natural persons. Authorisation is required, subject to an economic needs test. Main criteria: the employment situation in the sub-sector. Professional associations (partnerships) between natural persons are permitted.
Slovenia: Establishment in the European Union is required in order to provide accounting and bookkeeping services.
Audit will be affected, but not as badly as you might think
Audit, being a heavily regulated area, will be affected by the transition period ending. This is unlikely to affect most AAT members, though some may be working within audit teams. UK auditors that want to practice in other EU nations must meet the specific requirements of individual countries. That varies wildly – some require residency in that country, while others require individuals to qualify in that country. Others go much further – for example, Slovakia, enterprises need at least 60% of capital interests or voting rights reserved to Slovak nationals to become authorised to carry out audits. This will likely affect audit partners and firms more than junior auditors, however.
Recognition of professional qualifications
While the mutual recognition of professional qualifications is not in the agreement, the deal confirms that 14 EU member states will recognise professional qualifications for accountants and bookkeepers without any restrictions. A further 13 will impose an “economic needs” test. If you’re providing tax advice, the provisions are similar.
The UK will also continue to recognise EU qualifications in accounting bookkeeping and tax advice services without imposing any reservations or tests.
The trade agreement provides an overall mechanism to move forward with mutual recognition of qualifications. The Joint Partnership Council, a body established to settle disputes and resolve detailed issues, is expected to set up a sub-committee to tackle qualifications.
AAT’s CEO, Mark Farrar, commented: “We have yet to clarify the process by which we could develop automatic recognition of AAT qualifications in other countries.”
“But it is hopeful that there will be a pathway to securing further understanding on the services sector and mutuality of professional qualifications.”
Mark Rowland is a journalist and former editor of Accounting Technician and 20 magazine.