The new UK-EU Trade and Cooperation Agreement: Solutions for cross-border trade
In Part I of this blog, we looked at what the Brexit deal means for cross-border trade and the effects it has on SMEs. In this part we will look at a number of hands-on solutions for exporting UK businesses. If you have missed the first part, you can read it here.
Solutions for customs clearances
If you trade goods and are struggling to fulfil the new requirements for customs clearances, you can
use the services of a forwarder or an agent for customs declarations.
employ extra staff to handle this.
agree different Incoterms (rules for terms of trade) with your foreign business partners to distribute some of the tasks to them and to streamline your own processes.
take up training, mentoring or coaching.
apply for an Authorised Economic Operator (AEO) status. This will be a comprehensive process, which might require assistance by professional service providers.
Solutions for compliance issues
If you need to fulfil compliance issues for
As a UK business without an establishment in the EU you need to appoint an EU Data Representative. As a UK business with an EU presence, you need to appoint a certified Data Protection Officer (DOP) and possibly also a UK Data Representative for you EU legal entity (provided you cannot cover this requirement yourself).
For CE marks, labelling requirements (eg, food):
You can use the services of an agent/importer/wholesaler, ie, a third party established in the EU that places your products on the EU market and accepts full liability for it. The downside is that you will need to disclose sensitive business data and are dependent on a third party, whose business interests might diverge from yours. Alternatively, you can establish your own EU presence to avoid these risks and at the same time also create a foothold in your export market.
EU e-commerce fulfilment, Inner EU - VAT registrations, financial services etc.
For any of these examples and other cases that require a business to be inside the EU/EEA you need to establish an EU presence.
What is an EU presence?
Contrary to common belief an EU presence is not simply covered by using a virtual office address in Europe. A legal EU presence consists of two elements; firstly, the formation of a legal entity (or legal person), and the most common (and generally also simplest) form would be a limited company.
The process of setting up an EU limited company varies from country to country, but the crucial piece of information here is that many EU countries allow UK residents to become registered as managing directors (and shareholders) of their EU company.
Secondly, you need a place of business, a so-called ‘permanent establishment’. In most cases, a virtual office address at a business centre providing front desk/reception services would be sufficient.
Once everything is set up, you will need to ‘run’ your EU company with the least possible disruption and cost to your everyday business (eg, by remote control from the UK).
Depending on your business model and if your EU presence purely serves the purpose of meeting export requirements, all you might need are the services of a law firm, at least for the incorporation and the initial phase of your EU business, and those of an accountancy firm. Of course, the more complex your business activities are, the more services you might need, for instance: HR recruiters, marketers and so on.
Taxation: The UK has bilateral double taxation agreements with EU countries that allow you to transfer funds to the UK tax free.
While setting up an EU presence sounds like a wonderfully straightforward path – the reality is, in most cases it is not. Unless you have ties to professional individuals and businesses abroad you will need to build up a network of associates and cooperation partners in a foreign country where English – with the exception of Ireland – is not the native language.
This is where professional service providers come in. Brexit created a demand for these corresponding services and with it a new niche industry.
So, if you are seeking simple, efficient and affordable solutions take great care to choose the right partners to build a bridge to Europe. For the selection process you should be able to answer the following questions with a ‘yes’:
Does your potential partner understand and suit your company in terms of professionalism, business model, ethics and values?
Are they native or have been resident in the countries they are offering services in?
Do they have inside knowledge of the economical and cultural aspects of doing business in these countries and regions they are offering their services in?
Do they have a network of local service partners, such as lawyers, accountants, marketers, etc., in these countries?
Can they provide a complete one-stop solution, where you can obtain everything through them with the assurance that there will not be blame-shifting if things go wrong?
Of course, these criteria are only of a general nature, so best complete this list with questions that are tailored to your business. If you are unsure regarding choosing the right assistance or do not know where to start your search, simply contact us. We are always happy to help.
Trade with Europe Ltd provides one-stop solutions for UK businesses to export and grow European markets. Circumvent trade barriers and manage your EU trade from the UK with only minimal disruption to your everyday business.