In the post-Brexit era, the landscape of doing business in the EU as a non-resident has shifted dramatically. Understanding these changes is vital for maintaining your business operations. It’s not only about tariffs and customs declarations; it also involves issues like product standards, certifications, and regulations that differ across countries. Key agreements like the UK-EU Trade and Cooperation Agreement have implications that business operators must grasp.
Non-EU Residents And VAT
Value Added Tax (VAT) compliance is a critical aspect of conducting business within the European Union, particularly for non-residents in the post-Brexit era. VAT is a consumption tax applied to most goods and services in the EU. The system is complex, with rates varying among member states and certain exemptions applicable to specific products or services.
You may need to register for VAT in the European country you’re conducting business in, even if your company is based outside of the European Union. This is often the case if you’re selling goods or providing services to customers in that country.
There’s a special scheme called the Mini One Stop Shop (MOSS) for businesses that supply digital services, which simplifies VAT obligations. However, post-Brexit, UK businesses can no longer use the European Union MOSS scheme and must instead register for the Non-Union MOSS scheme in an EU member state.
EU Banking For Non-Residents
Having a local bank account in the EU can facilitate smoother business operations, including receiving payments from clients and paying suppliers or staff, but it comes at a cost. Fees and charges are often inflated, and there may be other penalties or requirements for a local account that native businesses are not exposed to, putting you at a disadvantage in the local marketplace.
Since Brexit, the process of opening a business bank account in the EU for non-residents has become more complex due to additional verification requirements and regulatory scrutiny. You’ll typically need to provide your business registration documents, proof of address, and identification documents. Some banks may require more information based on their internal policies.
Fintech companies are an alternative to traditional banks, which offer digital banking services and are typically more accommodating to non-residents. Silverbird has this guide for businesses on how to open an EU or UK bank account for non-residents. Their service allows businesses to complete payments in over 200 countries, facilitating trade and making accounting easy across economic borders. You can also read more about the company from Max Faldin, the founder, who wrote a bit about the idea of the company on Silverbird’s website.
Before you open any multinational account, make sure that you understand the fees, features, and regulations associated with your chosen bank or financial institution. This can be the difference between profit and loss when doing business in the European Union.
Building A European Presence
Establishing a European entity can significantly facilitate your business operations in the EU. Several options include creating a subsidiary, establishing a branch, or setting up an independent company. Each option comes with its own legal and tax implications.
Creating a subsidiary means starting a separate legal entity that is controlled by your existing company. It provides a degree of separation between the parent company and the EU operations, which can limit liability but may also involve more complex administrative and tax obligations.
Establishing a branch involves less administrative burden as it’s not a separate legal entity but an extension of the parent company. However, it can expose the parent company to more liability. Setting up an independent company can provide maximum separation from your existing business but also involves the most extensive setup and operating requirements.
Digital Platforms Grant Easy EU Access
Digital platforms have revolutionised the way businesses operate, offering an invaluable tool for non-residents looking to penetrate the EU market. Such platforms can provide you with a direct line to millions of potential customers, bypassing some traditional barriers to international business.
Despite the convenience, it’s crucial to understand the rules and regulations associated with these platforms, including data protection regulations under GDPR, consumer rights, and specific platform policies.
Remember that digital platforms are just one piece of the puzzle. They need to be integrated into a broader strategy that includes elements like customer service, digital marketing, and logistics to successfully do business in the EU.
Knowing The Lay Of The Land
Entering the EU market post-Brexit requires careful consideration of the region’s cultural and legal landscape. This understanding will allow you to tailor your business strategies to meet local requirements and expectations.
It is always worth remembering that the EU is a rich tapestry of diverse cultures and languages. A business strategy that works in one country may not work in another. Market research can help you understand your target demographics, cultural nuances, consumer habits, and local competitors. Remember, an adapted approach that considers local culture can make a big difference.
Legally, there are specific laws and regulations you need to adhere to. These include consumer rights laws, data protection (GDPR), competition laws, and sector-specific regulations. Failure to comply can result in severe penalties.
Brexit may have caused shockwaves across Europe and the wider financial world when it happened, but business is business. There are lots of solutions already to help businesses outside of the EU operate inside of it. The EU is a thriving consumer market, use these tips to help grab a piece of the pie for your business.
