Today Intertrust introduces its Brexit Ambassadors
It's now March and less than a month until the UK is scheduled to leave the EU. And yet, UK businesses still have no clearer idea of how they will trade with the EU and the rest of the world after 29 March. The UK Government has added further uncertainty with Theresa May talking of an extension to the Brexit date and business does not like uncertainty. Nevertheless, positive stories continue such as the Norwegian Sovereign Wealth Fund announcing that it plans to increase its exposure to the UK, a reflection of the continued opportunities the country has to offer.
However, with such little clarity, businesses must act now to ensure that they're still able to operate in and out of the EU from 1st April 2019. So today we're publishing five questions organisations must consider to ensure they're prepared. We're also introducing our Brexit Ambassadors, experts from key European jurisdictions. Their experience in helping businesses expand globally has already guided many of our clients through establishing entities in EU jurisdictions in readiness. Whether you've chosen to establish an entity in a specific jurisdiction or are considering the different options, we have experts who can help you navigate the process.
1.Will you still meet with your compliance requirement after Brexit?
Brexit will inevitably have an impact on current and future regulatory implementation. Areas that need to be considered when assessing the compliance impact include 4th EU AML Directive, MiFID/MiFID II, Margin Requirements – Non Centrally Cleared Derivatives, EMIR, Data Privacy, UCITS and AIFMD.
2.Do you market your products or services to customers between the UK and EU?
When the EU's 4 freedoms no longer apply to the UK, it could see the of passporting a lynchpin for the financial services industry and, as previously highlighted the impact extends far beyond banks and can even affect UK-based auditors. There are already high profile examples of UK-based companies who have established entities within the EU in order to maintain frictionless trade. However, EU-based companies who are extensively dealing into the UK would do well to consider establishing a similar structure across borders.
In addition, the end of free movement of goods could also impact the wider base of suppliers and contractors, resulting in higher tariffs and timings on goods moving across borders. Conducting an audit of suppliers to ensure their preparedness, in addition to your own company's, is essential in helping to draw up a strategy for dealing with any potential increase of costs and time.
3.Do you have a clear overview of what will change in the area of direct and indirect taxation when the UK leaves the EU, and what the potential consequences are for your business?
The main areas that will be impacted are dividend withholding tax, cross border mergers, limitation of benefit provisions, not forgetting everyday taxes such as VAT and customs duty. With the European Court of Justice no longer holding sway in the UK, it is unclear who will issue case law or preside over disputes.
4.How dependent are you on employees with EU nationality in the UK or UK nationality in the EU?
After Brexit, in the absence of any deal or transition period, the free movement of people could be in jeopardy. Until a new agreement is reached between UK and EU, international companies which hire EU citizens in UK and UK citizens in EU will need to assess the impact of different scenarios – will employees still be entitled to work indefinitely or will they need to apply to remain? Will companies be prepared to support their employees through this process? If you're considering relocating, is there a skilled, local workforce you can draw on quickly, conversely, will the decreasing number of prospective employees arriving from the EU pose a potential problem for your UK-based business?
5.Are you prepared for currency fluctuation?
How much exposure do you have towards the pound and what would be the consequences of a further fall in its value on your business? Whilst fluctuations add to the increased uncertainty that businesses are suffering, the UK remains crucial to the global economy a situation that no-one expects to change and opportunities will always be available.
If you think that these questions will impact your business, it can seem like an insurmountable challenge. However, our Brexit Ambassadors are available and experienced to guide you through the coming weeks and months.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.