Updated: Sep 6
Bypassing EU trade barriers - admittedly, this sounds like a variation of ‘cakeism’ (the doctrine of having one's cake and eating it) but be assured it is not. In fact, the concept of it has been best practice for more than 100s of years, albeit mostly used by big international companies in a fairly complex and expensive way. Therefore, many decision makers in small or medium sized businesses assume such solutions are out of their range, but you might be surprised what today’s international business environment has in store for you.
Size doesn’t matter anymore
What do multinational corporations do to access protected foreign markets? Quite simple, they establish subsidiaries. They do it because this is the only option, and because they can. Many SMEs with their limited resources have effectively been excluded from this opportunity, at least until now.
The digital revolution has created a new industry offering affordable solutions for smaller enterprises. There is no longer the need to replicate your UK business in another country. Today you can outsource the formation of your EU company and even all services to legally manage it from the UK.
Firstly, you need a Permanent Establishment (PE), i.e. a place of business. The minimum requirement for a PE is a postal address with an authorised recipient for your mail during business hours. In most cases a virtual office with a front desk and a telephone reception will be sufficient.
Merely renting an office address won’t be enough to start trading as an EU company. You also need to establish a Legal Entity (also called Legal Person), the most popular form would be a limited company (Ltd). Incidentally, many European countries allow UK residents to be registered as managing director of an EU company.
Running your EU company
To manage and operate your EU business a network of professional service providers will be required, e.g. chartered accountants, lawyers, advisors, operators, marketers, salespeople, etc.
Needless to say, that only very few UK businesses would be able to fulfil all requirements on their own, let alone to find a network of efficient and trustworthy associates. This is where service partners come in, who can provide all legal obligations as well as a network of local service professionals.
The devil is in the detail
When choosing such providers be aware that at this point things can potentially go wrong. Make sure to take great care selecting the right people. Some aspects to look out for:
Rather than buying services (e.g. registered office address, company formation, business advice for foreign markets, accountancy, etc.) from various sources, search for partners, who are able to offer most of these services rather than having one service provider for each service. Make sure they have a network of local service providers and adequate experience and knowledge of the foreign market to design a complete business strategy for you.
A further invaluable advantage of obtaining services from a single source is routine and smooth transition of processes and easier rectification should things go wrong.
In short, take your time, use your head and do your due diligence when selecting your ideal partners.
For more information on trading from and to Europe please get in touch.
Trade with Europe Ltd helps UK businesses to export. Our cross-border services include a network of service providers, such as fulfilment warehouses , e-commerce specialists, accountants, lawyers, etc. in the UK, but also in the Netherlands and Germany. We also offer readymade solutions for UK businesses to legally trade in the EU, even after Brexit.