Why should British entrepreneurs set up a company in the EU after Brexit?
The 23rd of June 2016 is a landmark date in the EU political history. During a referendum held on that day, more than a half of the British voters expressed their wish to leave the European Union. The main reason for Brexit was Britain’s desire to gain more independence in controlling its immigration flows and regain control over its economy.
The event will certainly have a significant impact on the economical and political life of the country. In this article, we discuss the reasons why large and small-scale British entrepreneurs should consider setting up in the EU after Brexit.
Access to the single EU market
One of the major concerns about Brexit is that the UK may lose access to the EU single market which currently comprises more than 500 million consumers. The Lisbon treaty states that post-Brexit UK will have 2 years to negotiate and secure a new trade deal with the EU. The negotiations will cover a broad range of issues, including, trade and customs restrictions, passport control procedures, and product safety requirements. Since the outcome of the negotiations is unclear, businesses that would like to make sure that they will have unrestricted access to the single EU market should consider setting up a company in the EU.
London is one of the world’s largest financial hubs hosting a number of companies engaged in banking, insurance, and other financial operations. In most cases, duly-licensed EU financial companies have access to the financial markets of all EU member states. Taking into account that Britain will withdraw from the EU, financial companies having British licenses may no longer be permitted to operate in the EU. Therefore, British entrepreneurs engaged in financial activities and targeting European markets will benefit from setting up business entities in the EU.
Harmonized corporate legislation
EU law provides for effective and transparent protection of shareholders, employees, and creditors as well as reduced administrative burden on businesses. After Brexit, UK companies may lose not only the aforementioned benefits, but also find themselves in a regulatory uncertainty.
Possibility to choose a low tax jurisdiction
Choosing a business location includes a number of factors, such as logistics, public infrastructure, availability of skilled workers, fiscal and monetary policies, and property regulations. Corporate taxation is an essential point of interest to businesses. In the EU, a number of countries offer low tax rates, attractive incentives for start-ups, free economic zones, and convenient strategic locations. For example, Bulgaria provides entrepreneurs with a low tax rate (10%), qualified and inexpensive workforce, low real estate prices, and infrastructure for accessing the European markets.
Since the long-term consequences of Brexit are not clear, UK businesses willing to avoid unpleasant surprises can move some or all of their operations to the EU. Our specialists will be glad to provide you with advice on where and how to set up a company in the EU.