How British companies can operate in Europe post Brexit
One of the biggest hurdles facing British companies in a post-Brexit world is that of border issues. The new regulations have created a series of problems for UK companies for which the Department for International Trade (DIT) has advised the registration of new firms within the EU. This, it has declared will aid in issues surrounding VAT. By setting up shop within the EU, UK companies can create distribution centres which can stave off unnecessary admin, additional charges and cross-border delays.
What about tariff charges?
According to the EU-UK Trade and Cooperation Agreement (TCA), tariff duties are deemed non-existent when “rules of origin” are met between the two nations. These rules go on to dictate that goods are composed primarily of UK inputs and that EU registered companies make every effort to claim the 0% tariff rate on goods of UK origin. In order to claim the 0% rate on imports, a ‘Statement on Origin’ must be obtained from the UK supplier. In addition, all non-EU goods of origin that come by way of the UK into the EU could be made to pay tariffs. The same applies to UK goods composed of non-EU content, but exceeding permitted levels.
Can EU countries still sell to the UK?
Due to the fact that the UK no longer enjoys membership to the EU-wide VAT system, the EU can no longer validate UK VAT numbers. The ramifications of which include the fact that EU businesses must now register UK VAT numbers and implement British VAT at the point of sale as opposed to that of importation. This rule is applicable to products with a value lesser than £135. As is to be expected, all British VAT must be collected and submitted to Her Majesty’s Revenue and Customs (HMRC). The fallout of this new arrangement has been extensive, with several EU-based business claiming to have stopped sales to individual UK customers as a result of the policy. Some are indeed playing ball, electing to register for UK VAT while other companies have made their disdain clear by choosing to cease their business activities in the UK. One can only imagine what the impact on FTSE 100 is going to be as trade between UK and the EU has and continues to affect it.
The post-business fallout
It’s not just conventional EU business interests in the UK that have been forced to re-examine their ties, affiliates and operations; global organisations have also been experiencing second thoughts. Major tech and automotive corporations have voiced their concerns about setting up shop in Britain, key amongst such voices are Tesla and Sony. The American electric auto-maker has opted for Germany as the location of its next factory while Sony has decided on the Netherlands as the new base of its European headquarters. Of course not every organisation is fleeing the scene. Global auto-giant Nissan is going to build its Qashqai in Sunderland despite the possibility of an EU tariff threat. With a lot still up in the air post-Brexit, it comes as no surprise that businesses seek solidity and stability as opposed to unforeseen outcomes. However, it also does need to be stated that any EU business or organisation looking to take its operations elsewhere will likely receive a prompt and efficient response from the UK in order to retain their services.