Brexit or no Brexit, all British companies dealing with the EU will have to consider changes in their corporate structure or operations.
Ever since Brexit was announced in 2016, INCO Business Group has been a key figure for Brexit scenario planning, in the Dutch incorporation landscape.
INCO Business Group has assisted over 100 Brexit entrepreneurs to establish a company in The Netherlands, or to apply for a VAT/EORI number to continue their international trading (and import/export) activities.
In 2018, INCO presented a Brexit strategy during the Going Global conference at Excel London, which was also covered by the Dutch national news channel (NOS - watch video). In October 2019 INCO Business Group joined forces with Economic Policy Group to host a Brexit Breakfast, to further inform British entrepreneurs about the possibilities of passporting their current business to The Netherlands.
In November 2019, we expect several British entrepreneurs, which will be part of our Startup Day, incorporating their Dutch company (or branch registration) on the spot!
So why are these business decided to expand their business to the Netherlands? And what can INCO exactly do for British companies that are (or might be) affected by Brexit?
Why using our Brexit Scenario Planning Services in The Netherlands?
Businesses across all industries are experiencing (legal) uncertainty when it comes to business operations with regard to the United Kingdom, particularly in the following areas:
Import & Export – depending on the future trade relationship the impact of Brexit will likely disrupt current trade flows, and increase the costs of getting products from the UK in Europe.
Supply Chain – Customs and regulatory changes will impact supply chains.
Legal – As a result of Brexit existing legal contracts may no longer be sufficient and/or may lack Brexit related provisions. Contracts should be reviewed and adjusted where necessary.
Tax – as numerous European (tax) Directives with regard to interest, royalties, dividends etc. will be no longer applicable, tax structures that involve connecting British companies with European holding companies or subsidiaries should be revisited
Financial Services - The expected loss of flexible “passporting” arrangement for financial licenses means that business scale will need to be adjusted, or that businesses need to apply for a new license in Europe in order to maintain their services
HR - Questions on HR-related affairs and how to employ or relocate UK employees in the Netherlands and vice versa.
Using Dutch corporate services
When you are a British company, affected by Brexit, and planning to incorporate a company in Europe to fix your situation, one of the first considerations you have to tackle is where you will start your European business.
Contrary to what many businesses believe, customs and importing formalities will also be in place in the case of a soft-Brexit. Figures show that in Holland alone there are more than 30,000 companies that currently do business with the United Kingdom; apart from that, these companies do not import or export beyond the European Union. As a result, they are unfamiliar with Customs and customs formalities.
VAT Consequences of Brexit
The EVD ( EU VAT Directive 2006/112/EC) has an overriding effect on all EU Member States, however this Directive is not always implemented in a similar manner by the Member States.
As a consequence, when the UK leaves the EU it will no longer be covered by the Directive, and as such the UK could have free reign to amend its VAT rules as it sees fit. On the flipside, British companies importing goods of services to Europe, are likely to be affected by local/EU Vat and import requirements.
Post-Brexit we would expect there to be little difference concerning supplies of services. Generally, B2B services are treated as supplied where the customer belongs and that customer must account for the local VAT itself.
However, in the case of Exports & Imports of goods, more British companies are likely to be affected. If the UK leaves the EU free trade area then all supplies of goods to the EU will be considered exports. Under existing UK VAT regulations these would continue to be zero rated. However the EU buyers will likely be required to charge import VAT and, more importantly, import duty (depending on the classification of the goods).
The import VAT can be claimed back from the tax authorities by filing a Dutch VAT return (this applies for most businesses) so although the VAT will not be an actual expense, it will create a cash flow issue. Ofcourse the duty costs are irrecoverable, and therefore are an actual expense for importing businesses.
This means that EU businesses will see an increase in the cost of products originating from the UK
What INCO has to offer to Brexit-companies
INCO has an experienced incorporation team that has already dealt with hundreds of requests for help from British entrepreneurs. We have a cross-functional Brexit team including specialists covering the main industries impacted by Brexit.
In overall, we can help Brexit affected companies with:
What you should consider
It’s not always required to establish a company in The Netherlands, in order to obtain a Dutch VAT number, or employ staff in The Netherlands. But in many cases it is. It’s important to carefully check the tax and legal requirements, and consult with an expert, to avoid any unnecessary costs and liabilities.
In case your British company operates in The Netherlands (via a branch registration), the British company can be held liable for any claims in The Netherlands, so attention is required.
Here you can read more about whether you should consider to register a branch or to establish a Private Limited in Netherlands.
More information about dutch brexit solutions
In this guide we have tried to give an overview of our approach towards Brexit Scenario Planning and its importance for you and your UK business. Of course, each situation and business requires a personal approach. We would therefore want to advice you to book a call with one of our BREXIT Experts, so we can discuss your situation in person!