The trading relationship with the EU completely changed from 1 January 2021 and since that date businesses have had to adapt to new rules and procedures. The impact has been varied, with some affected more than others, but all businesses still need to make sure their international business model is fit for purpose.
Over the past 15 months, the Coronavirus pandemic and the end of the Brexit transition period has meant businesses have had a lot on their plate. We are now almost six months into the post-Brexit landscape with many businesses now more familiar with the new normal. However, there is no denying that the way business is conducted with the EU has had to change now that we are outside the Single Market and Customs Union.
Beware of new local regulations
When doing business in the EU, the additional complexity that arises from the new EU Trade and Cooperation Agreement (TCA), has meant that businesses now need to factor in a greater appreciation for the local regulations of each country. This increases the extent of advance planning that is required in order for businesses to make sure they remain compliant when servicing their EU customers. Rather than having to make themselves familiar with only one set of regulations for the EU, businesses now also have to focus on regulations on a country-by-country basis. For example, if a business has traded in Spain, it doesn’t automatically mean that it will be compliant to trade in Italy as the regulations and requirements may be different.
At Menzies our membership of HLB International, the global advisory and accounting network, enables us to source local advice in over 150 countries, including all EU member states. Where businesses have won contracts with overseas customers, we can therefore help assess the local implications that may arise and answer questions around issues such as VAT registration, business taxes, global mobility and sector specific operations. This local advice may mean that a business needs to adapt and change its approach and critically review whether its previous operating model is still suitable for the future. For instance, if a business is importing and exporting goods from and into the EU, would it be more cost efficient in the long run to set up a hub operation in the EU and take goods directly there while employing staff locally?
Taking advantage of the new global landscape
The impact of the TCA has also led more businesses to look beyond the EU and to consider the trading relationships that the UK now has with other countries around the world. Opportunities are opening up for business as a result of new free trade agreements, and markets that may previously have felt off limits or unnecessary may offer significant rewards.
For UK businesses that embrace a global outlook, the objective is to be able to trade freely and find new markets that are right for their products and services. Businesses have started to understand that to do this they need to continually test their international business model and that they may need to make changes to ensure they can take advantage of all that the new global landscape has to offer.