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My wife holds an Indian passport. In previous years when applying for a schengen visa my wife has been able to apply as the spouse of an EU citizen and as a result had to submit fewer documents and become exempt from fees. Now that we are in the brexit transition period, is it the case she can still apply in this capacity?

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Now that we are in the brexit transition period, is it the case she can still apply in this capacity?

Yes. The withdrawal agreement specifies that EU law still applies in the UK and to the UK until the end of the transition period. This means that citizens of the UK are still treated as EU citizens for the purpose of EU law, including the free movement directive.

For example, consider this paragraph from the Free movement - EU nationals page on the website of the European Commission:

The United Kingdom

All EU law, across all policy areas, will still be applicable to and in the United Kingdom during the transition period. It is currently foreseen that the transition period ends on 31 December 2020.

Consider also this statement from the German diplomatic mission to Nigeria. The statement was written before it was known whether there would be a transition phase, so wherever it says "once the United Kingdom leaves the Union or after a possible transition phase has come to an end," you can read "after then transition phase has come to an end":

The rights of British citizens and their family members to freedom of movement within the European Union will no longer apply once the United Kingdom leaves the Union or after a possible transition phase has come to an end.

Until that time EU family members of UK nationals continue to benefit from the rights in the Free Movement Directive and its visa facilitations. They have the right to obtain a visa free of charge and as soon as possible on the basis of an accelerated procedure.

As of the withdrawal date or the end date of any eventual transition phase provided for by a withdrawal agreement, the above facilitations based on freedom of movement rules will no longer apply to non-EU family members of UK nationals, neither for the issuance of visas, nor for border controls.

After the withdrawal or the end of a transition phase travellers holding a visa issued to a non-EU family member of a UK national under Freedom of Movement rules should be prepared to provide evidence at the point of entry into the European Union that that they fulfil all Schengen entry requirements, e.g. possession of a valid travel document (validity of no more than ten years and valid for three months after the intended departure from the Union, proof of accommodation, employment, sufficient means of subsistence, invitation letter or return ticket, documents proving the family member’s economic situation in the country of residence or the genuine intention to leave the territory of the Member States before the expiry of the visa.

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