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Brexit – should you set up a business in EU (Denmark)?

We figured out the key challenges companies will face at the end of 2020 and also looked at how your UK business could benefit from relocating to Denmark.

Brexit – should you set up a business in EU (Denmark)?

Impact of Brexit on UK businesses: Key challenges & how to overcome them

Three years after the Brexit referendum in which Great Britain voted to withdraw from the EU, the EU and the UK still have not agreed on a final exit deal.

Instead EU will keep the current set of rules when trading with the UK, until the end of 2020 (31.12.2020).

After this date, we will either have a situation with status quo (the same rules after the exit as now), or some significant challenges for the companies – on both sides of the border – when doing business from or with the UK.

The impact of Brexit on UK businesses has been difficult to forecast: years of rigorous and often tense negotiations over trade, immigration and economic concerns have created a climate of uncertainty for companies in every industry. 

This uncertainty has already had a serious impact on UK businesses, which have been told to brace for anticipate increased trade taxes and duties, regulatory changes, potential production shortages and changes to free movement and migrant worker rights after Brexit. Scores of multinational firms are spending millions on relocating their headquarters, operations or employees to mainland capitals, stockpiling pharmaceutical and food ingredients, and many have announced widespread layoffs and closures.

We did some research into the impact of Brexit on UK businesses, and here we’re going to unpack the key challenges companies will face – if a “no-deal” exit will be the scenario on 31.12.2020 — and also look at how your UK business could benefit from relocating to Denmark. 

How will Brexit affect UK businesses?

The UK has long enjoyed close and profitable economic relationships with European countries. Free trade and the free movement of goods, services and people within the EU saw cross-border business relationships flourish, and many UK companies underwent significant growth with an immensely larger consumer market. 

But because most regulations which govern trade with some of the UK’s closest and biggest trade partners arise from EU legislation, there will be widespread changes for any company with operations in both the UK and mainland Europe. 

1. Import of goods and services from EU countries, including associated import customs and VAT

UK businesses importing goods from the EU into the UK, might get new import customs and VAT charges to pay on them. Given that 79% of the food in UK supermarkets is imported from the EU – and with Germany, France and Spain being some of the UK’s most important trading partners – the impact of new import charges could be huge.

2. Export customs and VAT after Brexit

Goods from the UK won’t be sold in the internal EU market: they’ll be treated as coming from a ‘third country’. UK goods will therefore possibly be subject to customs duties and VAT, making EU trade more expensive for UK retailers and vice versa. So, one key impact of Brexit on UK businesses will be higher price tags on UK goods in the EU market, which will ultimately make EU goods more attractive and affordable to EU consumers and businesses.

These changes to import and export costs means that the impact of Brexit on small businesses will be particularly strong. Small and startup businesses won’t benefit from the strategic partnerships that larger businesses have already established with EU businesses, and growth will become slower and more expensive for new starters in the market.

3. The employment of EU citizens in the UK

The impact of Brexit on UK businesses stretches further than VAT and customs duties. A significant proportion of the UK’s workforce is made up of EU migrants, including 14% of accommodation and food services, 11% of manufacturing, and 8-9% in agriculture, construction and transport. 

The number of EU nationals working in Great Britain, from French patissiers to Romanian fruit pickers, has steadily increased for the last 20 years. But the uncertain future for these workers has seen a downturn in employment in key industries, including public health. 

While the UK government has announced that no EU nationals already living and working in the UK will be required to leave, the path to residency is less clear. The NHS, which relies on the EU-qualified nurses, doctors and social care workers who make up 5-9% of its workforce, has reported difficulties filling over 100.000 vacancies, and a 91% decrease in registrations from EU health professionals since Brexit.

So, if your business relies on EU migrant workers or specialist services located in the EU, Brexit is likely to make recruitment and access to these services more difficult and costly.

If these prospective changes are driving you to despair, bear with us. It is possible to ensure a sustainable and successful future for your UK business after Brexit. Let’s talk about how you can do that.

Mitigating the impact of Brexit on your UK business

Many companies have already moved their UK headquarters and operations to mainland Europe due to the many legal, financial, economic and regulatory changes that will follow Brexit. U.S. multinational insurer AIG has set up a new company in Luxembourg, JPMorgan has moved 200 billion euros of balance-sheet assets to Frankfurt, and Panasonic has moved its European headquarters to Amsterdam. Even leading British broadcaster BBC is moving some of its licenses to the Netherlands in order to keep transmitting to EU member states following Brexit. 

The migration of big brands away from the UK could be problematic for the UK economy, but this raises the question: could your business be better off with a mainland headquarters or maybe a new entity in the EU, after a “no-deal” Brexit by 31.12.2020?

Relocating to an EU member state

As an EU member state with a strong economy, Denmark is favourable and increasingly popular option for companies seeking to mitigate the impact of Brexit on their international business. 

Setting up a limited liability company in Denmark would mean that your business could still enjoy free trade and the free movement of goods, services and people within the EU. The impact of the challenges created by Brexit for UK companies, such as additional import and export customs, and VAT charges, between the UK and the EU, and workforce difficulties, would be weakened or eliminated. 

So, what is involved with setting up a limited liability company (ApS) in Denmark?

Setting up a Danish limited liability company (ApS) to mitigate the impact of Brexit on UK business
ApS stands for “anpartsselskab”, which is a type of a limited liability company in Denmark. As the owner of an ApS, you are not liable for the debts and obligations of the company. Your risk is limited to the value of the equity capital for which you’ve acquired shares.

Read more about setting up a Danish limited liability company (called ApS) here;

Price for setting up a new Danish limited liability company (ApS)

What information do we need from you?

Do you have any questions about Brexit and setting up a Danish limited liability company?