• Brexit and the implications for the Irish horse racing and breeding industries

    Following a nationwide referendum, which attracted a turnout of 71.8% (over 30 million voters) on June 23 2016, the UK voted to leave the EU by a margin of 51.9% to 48.1%.  

    On March 29 2017, UK Prime Minister Theresa May invoked Article 50 of the Lisbon Treaty, the legal process for leaving the EU, which provided the time frame of two years for the UK and the EU to agree the terms of the split.  

    Therefore, the UK is scheduled to leave the EU at 11pm on March 29 2019.  After a protracted period of negotiation, the UK and the EU agreed a Brexit deal in the form of a 585-page Withdrawal Agreement.    

    Although accepted by the UK cabinet on November 14 2018, the UK parliament overwhelmingly rejected the deal on January 15 2019.  Potential scenarios from this point include re-negotiating with the EU (most likely through an extension of Article 50); a second referendum; or the UK leaving the EU on March 29 2019 with no deal.  

    Full trade talks can only begin between the UK and the EU following Brexit (while the UK is a member state, such talks are not permitted under EU law) and will be facilitated by a transition period running until December 31 2020.  If the full UK-EU Trade Deal is not agreed by this point – given the protracted nature and possible complications involved in such talks – the draft withdrawal treaty also establishes that the transition period could be extended up to December 31 2022.  

    Brexit could have serious consequences for the Irish racing breeding industries. This section of our website is designed to provide information to all stakeholders as the UK prepares to leave the EU. 

  • ‘NO DEAL’ BREXIT

    If no form of association, or treaty, is agreed between the EU and the UK, either when the UK leaves the EU on 29th March 2019, or at the end of any transition period, this is what is known as a ‘no deal’ exit. 

  • Customs duties and VAT are the main taxes impacted by Brexit.  For the horse racing and bloodstock industry, the main Brexit tax issues, are as follows -  

    1 - Customs duty/tariffs of 11.5% on the sale of geldings to the UK.

       If there is no trade deal between the EU and the UK on duty the WTO rate of duty will apply. This rate for horses is 0%, but with the notable exception of geldings which is 11.5%.  This will be an additional cost on the sale of a gelding to or the purchase of a gelding from, the UK.     

      2 - The requirement forbonds for the temporary movement of horses to and from the UK.

        Where a horse is moved on a temporary basis, e.g. for racing or covering, from Ireland to the UK, or vice versa, a bond would have to be put in place to cover the VAT and customs duty (if any) that would arise in the event that horse did not return to his country of origin within the required time limit.

        This will ultimately be a cost for the Irish racing/bloodstock industries regardless of whether it is borne by owners or those transporting horses such as shipping agents. HRI will support the position that there should be no requirement to put bonds in place for horses particularly as it will be quite evident that the movement will only be temporary (e.g. for a single race).

        3 - The risk of non-payment of the “flat rate addition” to Irish farmers on the direct sale of horses to customers in the UK.

          On the VAT front, post Brexit there should continue to be no VAT payable on the sale of horses that move to the UK. However, the position regarding the sale of horses by non-VAT registered farmers in Ireland who sell horses directly to customers in the UK is not clear.  Currently they would be paid an extra 5.4% (the flat rate addition) by the purchaser. However, post Brexit unless we get Revenue agreement, it is unlikely that the flat rate addition will be paid on such sales which essentially will be a reduction in receipts for non-VAT registered farmers.

          4 - Additional administration / paperwork that will be required for the movement of horses to and from the UK.

          The movement of horses to and from the UK, whether temporary (racing or covering) or permanent (sales) will give rise to additional administration in Ireland and the UK including the completion of customs documents for each cross-border movement of a horse.  This would be particularly burdensome for persons that have no prior experience of the movement of horses to and from a non-EU country. 

          5 - Currency Fluctuations 

          A drop in the rate of sterling as a result of Brexit will make Irish exports more expensive to the UK, our largest market. 

             

              1 - The fall of the Tripartite Agreement which currently facilitates free movement of thoroughbreds between Ireland, the UK and France  

                If the UK leaves the EU with no deal, the long-standing Tripartite Agreement would cease to be valid as it operates as a derogation to current EU rules and only named EU member states are eligible to use it.  

                2 - The imposition of “border checks” on the movements of horses 

                As there will be an EU border between Ireland and the UK there will likely be “border checks”, though whether these would be carried out at the border or the entry point into Ireland or the UK is yet to be determined. There is an on-going risk that “border checks” could give rise to delays to the movement of horses between Ireland and the UK and mainland Europe through the UK landbridge.  

                3 - Export health certification

                In the event of a “No Deal” scenario, the UK would have to apply to the EU for listed third country status. Without listed status no exports to the UK from Ireland could take place. The Export Health Certificate (EHC) would replace the veterinary attestation or Intra-Community Trade Animal Health Certificate (ITAHC) currently required. Horses entering the UK from the Ireland would have to pass through a BIP. EU certification would require additional action from vets to confirm the absence of equine disease. This new process could require more planning from the equine owner/trainer/breeder and could involve increased cost, e.g. if additional blood tests are required. 

                4 - Lack of Border Inspection Posts (BIPs) 

                Animals traveling from a third country must enter Ireland through a Border Inspection Post (BIP).  There are currently two BIPs in Ireland - Dublin Airport and Shannon Airport.  Provision is being made by the Office of Public Works (OPW) for additional BIPs at Dublin Port and Rosslare Europort, as well as provision for additional facilities at Dublin Airport.  

                5 - Delays when using the UK as a landbridge

                The landbridge refers to the route to market that connects Irish importers and exporters to international markets via the UK road and ports network.  In a no deal scenario it is anticipated that the landbridge, at least in the initial period, may be subject to severe delays.  Dover – Calais has been identified as a particular bottle neck.

                6 - Restrictions to the free movement of Labour 

                With lack of certainty around the rights of EU citizens in the United Kingdom, and UK citizens in the EU, there will possibly be restrictions on the free movement of labour. 

              • Horse Racing Ireland and the ITBA have been working closely with industry stakeholders since the UK referendum result in 2016, working with politicians and officials around raising the awareness of the difficulties Brexit could offer the Irish racing and breeding industry. 

                Several delegations to Brussels have taken place over the past 18 months to meet Irish, Northern Irish, British and French MEPs. 

                Horse Racing Ireland has also met with European Commission officials, including a meeting with Agriculture Commissioner Phil Hogan and representatives from British and French racing. 

                A High Health Horse concept has been proposed by the EU Commission, seeking to have it enshrined in European legislation. The 3H Proposal has been endorsed by a host of international equine organisations and associations. 

                In autumn 2018, Horse Racing Ireland hosted the Agriculture and Rural Development Committee of the European Parliament and outlined the issues for the industry around Brexit as well as working through possible solutions.

                DG SANTE Commissioner Vytenis Andriukaitis has been lobbied by the EMHF for clarity on Commission guidance undertaken with member states around movement of animals between Ireland, UK and France. 

                Weatherbys Ireland is working to secure Passport Issuing Organisations (PIO) status to continue administering studbook services to Irish breeders.

                The racing and breeding industries in Ireland operate on an all-island basis in Ireland. In 2019, the will be 22 fixtures in Northern Ireland, 10 at Downpatrick and 12 at Down Royal. It is envisaged that there will be seven races at each of those meetings resulting in a proposed total of 84 races, although this is subject to change. 

                Approximately, 75% of runners at Downpatrick and Down Royal cross the border to compete. It is estimated that there are 7,000 thoroughbred horse movements across the border annually. There are 383 registered thoroughbred breeders based in Northern Ireland, producing 418 (IRE) foals in 2018. 

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