Xcode 12.5.1 fixed the issue for us!

@Pradeep_Chakoriya Wow, I can confirm! This worked for me as well! So I assume it's indeed some issue with permissions association.

But unfortunately after uninstalling the app and installing it again the issue is back.

Thank you for confirmation and suggestion. I've filed report as well https://feedbackassistant.apple.com/feedback/13132104

@rsebbe My colleagues that never installed app from Xcode (only from TestFlight) also experience this issue. The issue affects current version of my app as well. So users who update to watchOS 10 will make watch app useless even if I don't upload a new version.

@jclardy I believe that something is broken in beta 6-8 in terms of associating permission granting with the watch app: Location permission dialog doesn't appear on watch when you invoke requestWhenInUseAuthorization there. Instead dialog appears on iPhone if the companion application is running and active at that moment. Location permissions granted in companion phone app are only _ partly_ recognized by CoreLocation on the watch app. The status is correct: granted, but no locations delivered.

@georgbachmann Could you please try to delete your small sample app from device you installed it and then install it again. From out observations locations should be broken after re-install.

@georgbachmann Yes, resetting simulator brings permissions in initial state when they will work just ONCE and then broke again after reinstall of the app. There is also workaround for a real device described up the thread where you could on iPhone to Settings / General / Transfer or Reset iPhone / Reset / and Reset Location & Privacy Then the app will ask for permissions again and locations will work. Till the next re-install.

If location on watch is already screwed 10.1 will not fix it. But I can confirm that it works now after re-installation.