Why did you leave the UK?
What you need to know about Brexit as a self-employed person
Are you self-employed with clients in the UK? In this blog article, we'll tell you what Brexit means for you as a founder and entrepreneur and what you need to consider in your future business relationships with the United Kingdom.
Brexit: What's the Stand?
- Great Britain left the European Union on January 31, 2020. At the moment, the UK is still in a transition phase until December 31, 2020. Little has changed during this transition phase.
- On January 1, 2021, the UK will leave the European single market and the customs union, which is why the UK and the EU are currently in negotiations on how to proceed economically. The negotiations have been dragging on for several months and are still going on.
- The negotiations largely concern international trade, but also, for example, the entry and exit of EU and UK citizens.
At the moment it remains to be seen how the negotiations will end: either with a deal or a no deal Brexit.
What if there is no Brexit deal?
Trade between EU & UK
If no agreement is reached by January 1, 2021, Great Britain will leave the European internal market and the customs union without a special trade agreement with the EU. This would mean that there will no longer be free trade between the UK and EU countries.
As with the US, goods exported from or imported into the UK would Customs duties fall. This in turn would have a huge impact on UK trade and UK / EU businesses. The fees would be based on those of the World Trade Organization.
Import taxes, duties and restrictions will likely make it difficult to exchange goods. Not only do tariffs and import restrictions make the exchange of goods and services unattractive, but also likely that in the future Import and export documents required become.
For goods that are transported from the UK to the EU, it will be after Brexit Customs controls give. In the port cities of the UK, there will likely be delays due to the changeover.
We advise you to have one Apply for an EORI number. The application can be submitted online to the Customs Directorate free of charge. You need this for all imports and exports from or to the EU.
Sales tax system
Goods and services from the UK will be the Import sales tax are subject to after the Brexit is completed. The United Kingdom is no longer bound by the common European VAT system guidelines. So far, unfortunately, there is little information about possible changes in sales tax after Brexit. What to keep in mind is this:
- If your business is previously registered in the UK, you should re-register it in an EU member state as soon as possible.
- The reverse charge process may change for UK customers and suppliers. How this will be regulated in the future depends on the design of the new British regulations. It could also be that the UK continues to use the reverse charge procedure and thus the recipient of the service owes the sales tax or that sales tax registration in the UK becomes necessary.
- As an EU company, you will likely have to pay sales tax on imports from the UK. What exactly this means, for example whether you have to pay the gross price for purchases in the UK and then possibly reclaim the VAT from the German tax office, remains open.
UK company formations
Within the EU, founders have the option of registering their company in any member country. There is free movement of people, goods, services and capital in the EU member states. If London in particular was previously popular with EU citizens as a business location, it will be more difficult to establish a company in Great Britain without a Brexit deal.
Live and work in the UK and the EU
In this case, Great Britain's citizens would no longer be able to move freely between the borders. It can be assumed that they will have to apply for residence permits and entry permits if they want to live and work in the EU. The same applies the other way around for EU citizens in Great Britain.
Legal form Limited
The British legal form Limited, which many German founders chose because it simplifies formalities, will become less attractive. After Brexit, German entrepreneurs can no longer have their limited company entered in the German commercial register. As the owner of a company outside the EU, you have to expect complicated legal requirements.
Brexit will have an impact on your business when you sell, buy, or move goods across the UK. We advise you to follow the news about the Brexit decision. With negotiations going on for months now, it is quite possible that there will be no deal and that the above points will take effect.
You should check the government website for specific information on what impact Brexit will have on your business.
We also advise you contact your business partners in the UK and talk to them about possible changes. It's likely that after Brexit they will need new licenses to trade with you after.
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