Knowledge Base
Describe European single market mechanisms, including the European passport and equivalence procedures
Which modality of the European passport allows an institution to offer its services from its home State to other Member States without a local physical presence?
The freedom to provide services allows an institution to offer its services from its home State to clients located in other Member States without needing a local physical presence. This modality relies on a simplified notification procedure.
Which event led to massive relocations to European financial centres to retain access to the single market?
Brexit profoundly disrupted the use of the European passport. Approximately 5,500 British firms used this mechanism before 31 December 2020. The loss of this right led to relocations to Frankfurt, Dublin, Amsterdam, and Paris.
What is the fundamental principle underlying the European passport for financial institutions?
The European passport is based on the principle of single authorisation, whereby a licence issued by the competent authority of one Member State allows an institution to conduct its activities throughout the EEA without requiring additional authorisation from host countries. This principle is essential for facilitating access to the single market.
What is the current status of equivalence between the United Kingdom and the European Union post-Brexit?
The European Union granted the United Kingdom fragmented and temporary equivalence post-Brexit, mainly for clearing houses, extended until June 2028. This situation illustrates the complexity of post-Brexit relations.
True or False: The host authority has the power to refuse a notification for the freedom to provide services.
The host authority has no power of refusal for a notification of freedom to provide services. It can only communicate the applicable local rules regarding general interest. This information is crucial for understanding the limits of host authorities' powers.
True or False: The equivalence granted by the European Commission is automatic and permanent.
Equivalence is neither automatic nor permanent. It results from a thorough technical assessment and may be subject to conditions. It remains revocable with generally thirty days' notice. This underscores the importance of regular assessments and specific conditions.
Categorize items by dragging them to the appropriate zones
Items to categorize:
European passport
Equivalence procedures
The European passport applies to financial institutions licensed in a Member State, while equivalence procedures apply to entities from third countries. This distinction is fundamental for understanding both mechanisms for accessing the European market.
Processing time for the freedom of establishment
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The freedom of establishment procedure, which allows the creation of a permanent branch in the host State, has a processing time of three months. This duration is longer than that for the freedom to provide services due to the complexity and additional requirements involved.