Maintaining Control of Your Business in the Wake of Brexit.
Updated: Feb 11, 2020
With the UK exiting the EU today, the divorce is far from finalized. There will still be a transition period until December 31, 2020, in which the UK and the EU will be attempting to reach agreements on regulatory barriers, trade, tariffs, and quotas. In the corporate world, uncertainty hampers business.
It is well-known by now that there will be issues with the free movement of capital and labor and there will be differences in legislation and how it is applied.
There is a way to regain certainty and have control over how you do business in Europe. Businesses that were only established in the UK can establish a presence in a Member State which will allow that entity to continue to conduct business within the EU, under EU laws and under the tax regime of the Member State in which it is established.
Since the inception of Brexit discussions, businesses wishing to maintain a presence in the EU have been opting to incorporate in Cyprus. It is no surprise that Cyprus is a popular destination given that it has a favorable tax regime (a flat 12.5% corporate tax rate on net income). However, as important as the tax legislation is, Cyprus offers progressive commercial legislation which is based on English common law but enhanced with EU commercial law as well.
There are two ways in which a UK-based business can establish a presence in Cyprus in order to maintain a smooth transition in these uncertain times: 1.) incorporate, and 2.) redomicile. Incorporating a company in Cyprus is establishing a new entity (perhaps even a subsidiary company). The second option of redomiciling is moving a business’s headquarters from the UK to Cyprus in which it will no longer exist in the UK.
Companies that are already well-established sometimes prefer to maintain the business continuity of (and relocate) the original entity without having to liquidate or start anew. Of the two options, incorporation is a much faster process than redomiciliation.
Establishing a presence in a Member State is arguably the easiest way to maintain the advantages of conducting business in the EU (including free movement of capital and labor, tax benefits, favorable commercial laws and access to a larger market), avoiding uncertainty and possibly high tariffs and barriers to entry, and generally taking control of your business trajectory.
For more information on how to establish a presence in Cyprus and corporate structuring, please contact us at email@example.com