By Ana Maricic, 30.01.19
Earlier this month, Theresa May failed to get parliamentary approval on the proposed EU withdrawal agreement. With the UK set to exit the European Union on 29th of March 2019, a ‘no deal’ or ‘hard’ Brexit is becoming increasingly likely. The full effect of Brexit on UK registered companies is still unknown, but it is likely to have serious implications on cross-border trade. UK businesses that operate across European borders could be facing a big threat as free trade deal between the UK and the European Union has not yet been put in place; when a deal is agreed it could bring serious customs, VAT and tariff implications.
The governments of various countries are competing to make themselves an attractive destination to relocate a company in the wake of Brexit. The following 3 countries are the most popular locations to retain a European Union presence:
Ireland has one of the lowest corporate tax rates in Europe at 12.5% and after Brexit, it will be the only English speaking country in the European Union. Ireland is in a unique position and could offer the ideal solution to Brexit. The Republic of Ireland (Ireland) is independent, while Northern Ireland is part of the United Kingdom, this will leave Ireland with a shared land border with the UK (via Northern Ireland) post Brexit. The British authorities have announced their plans to remain part of the Common Transit Convention post Brexit. This will allow Irish businesses to export between Ireland and UK to their destination with reduced customs checks and controls. Additionally, Ireland will maintain the EU Free Trade agreement allowing businesses to trade across European borders freely.
The Irish government has been busy preparing for a hard Brexit and has announced plans to publish the Brexit Omnibus Bill on 28 February 2019, which covers 17 areas that will need legislation in the event of a no-deal Brexit. If you are a non-Irish resident and considering the incorporation of an Irish company in the wake of Brexit, we strongly recommend you act quickly. Once an Irish company is incorporated it will require applications for tax registration and a corporate bank account which can take a few weeks. On this basis, we strongly suggest you act now to avoid not having your Irish company and these important items in place before a possible ‘hard-Brexit’ scenario materialises.
Moving a UK company to Ireland would enable it to retain an EU presence and avoid additional costs to trade. Click here to read more about how to Register a Company in Ireland.
The Republic of Cyprus is an island situated at the very edge of Europe, it is the third largest island with the third largest population in the Mediterranean. Although, often thought of as a holiday destination, Cyprus tax laws and other financial regulations make it ideal for a company looking to relocate in the wake of Brexit.
Having joined the European Union in 2004 Cyprus has its own unique advantages, there is no Controlled Foreign Corporation (CFC) law which allows all residents the right to legally form and conduct an offshore company. Cyrus has one of the most beneficial tax plans in the world due to its interpretation of EU tax legislation and its ability to resist frequent changes to EU tax laws. Recently the Cyrus authorities increased the corporate tax rate from to 10 to 12.5 percent, but this is still among the lowest in the EU and only payable on profits within Cyprus.
Some jurisdictions will allow a company to move its domicile (or place of incorporation) to another jurisdiction, this process is commonly known as re-domiciliation. Read more about how to Migrate a Company to Cyprus
Germany is a European Union member state with a corporate tax rate of 15%. Germany covers an area of 356,750 square km in northern Central Europe. Germany is conveniently situated in the centre of one of the world’s largest trading zones and shares nine borders with other European countries (France, Switzerland, Poland, the Netherlands, Austria, Belgium, Czech Republic, Denmark, and Luxembourg). Germany is also one of the world’s top three exporters with easy access to the Nordic countries and the United Kingdom via the North Sea and the Baltic Sea.
In the past German company law has been unwelcoming to the international mobility of companies and foreign investors. But Germany’s company law has changed substantially and new legislation to allow UK registered companies to become German has recently been proposed. The Business Conversion Law is the latest in a string of plans Germany has made in preparation for Brexit. If the draft bill is passed through the German parliament the country’s Transformation Act will be altered affecting approximately 10,000 SMEs (small to medium-sized businesses).
Under the current law, to become a German limited liability company, small firms are required to have a minimum share capital of €25,000 euros (this is higher than the share capital required by British limited companies). However, under the new regulation, British registered companies would be allowed to convert without increasing their share capital.
Once the new legislation passes moving a UK company to Germany would be very easy. The existing company could convert to a German company and continue operations in the EU. Click here for more information about how to Register a Company in Germany. In another attempt to secure forgiven investment post Brexit, Germany has submitted a bill that would allow British citizens living in the country to become German citizens, while retaining their British citizenship.
At this time the effects of Brexit on UK registered companies are not fully known and coming up with a Brexit strategy for your company may seem a daunting task. But there are various formation options available including a subsidiary company, branch company, holding company or a stand-alone company. If your company needs to retain an EU presence post Brexit, please contact us today. The experts at Euro Company Formations would be happy to discuss the available options relocate or expand your company.Contact US