As the intricate implications of Brexit are yet to be fully realized, many business owners are considering options for maintaining close business ties within the European Union. The UK government has voted on a deadline of January 1, 2021 as the final marker of the Brexit transition period, many UK nationals weigh options to relocate their headquarters to EU countries. Many UK citizens are concerned about the impacts of Brexit and Cyprus company registration might be the ideal solution to continue business operations and the free movement of goods and people throughout the EU moving forward.
The Aspen Trust Group provides the latest advantages of making the switch today.
What Does Brexit Mean for Businesses?
The UK government is pushing to finalize the rules for the future of the UK-EU relationship as the deadline quickly approaches. UK citizens and EU citizens alike ponder the effects the new deals will have on the free movement, living, and working criteria once the United Kingdom leaves the EU.
In essence, the UK has already made the move to no longer be an EU member state through the withdrawal agreement on January 31, 2020. However, the deal covered the smooth transition of withdrawing and only touched upon current matters pertaining to the 11-month transition period, preventing checks along the border with Ireland, and financial settlements necessary with the EU. The deal did not broach subject matters related to the future relationship of the two.
During the transition period, the UK government continued to follow EU rules, maintain trade, and contribute to the EU budget. Yet, there still has not been a trade deal reached within this time. For UK nationals with businesses, this has meant uncertainty about what should happen if the transition period expires and on December 31, 2020, the UK automatically loses trade agreements, the customs union and the single market.
Without a new deal, Brexit will cause British goods to become more expensive and difficult to sell in the EU, with the EU deciding which goods it accepts, the tariffs imposed on these goods, and a delay in processing at ports of entry. The service industry is also facing the loss of guaranteed access to EU countries. Failure to provide a deal before the transition period expires would basically affect all commerce and industry across the board.
According to the latest polls from the British Chambers of Commerce, only half of UK businesses with cross-border trade have taken measures to produce risk assessments or examine the impact of Brexit on the future of their business. The BBC wrote to Cabinet Office Minister Michael Gove to encourage urgent action and discussion to aid businesses in their preparations.
Without Relocation, Struggles Companies Might Face
Preparing your business for the end of the transition period can set you on a path not only to overcome Brexit complications, but also to thrive in a more advantageous business market. While many UK companies already considered a move the only solution to Brexit, more international businesses have found company restructuring or relocation to countries such as Cyprus a strategic investment for business prosperity regardless of their global location or proximity to the Brexit situation.
To determine if relocation is the best for your company, it is first important to run a risk assessment of Brexit on the future operations and costs of your business.
Possible consequences of Brexit include:
- Taxation: Will current tax rates and regulations be maintained or rather new standards implemented to replace EU recommendations? How will VAT be imposed on the future sales and movement of goods and services across borders? Are UK companies facing double taxation?
- Free Movement: How will this impact the movement of business professionals who work internationally or the processing time of the movement of goods between the UK and EU countries? Will there be new agreements reached that allow UK citizens to work while in the EU? Will businesses have access to talent if no deal is reached between the UK and the EU?
- Social Security and Administration: What complications will arise from the increased strain on administrative requirements to cover the liabilities associated with internationally focused employees?
- Fluctuations in Currency: How will businesses cope with the major shifts in values of currency already taking place since the beginning of the transition period?
- Data Flows: How will companies maintain daily operations that require the flow of personal information to provide services? What frustrations on payroll and human resources will Brexit have? Will businesses still have access to the Digital Single Market (DSM) that secures regulations on digital business operations?
- Regulations on Business Activity: What new protocols will be required of UK companies to continue business with EU countries? How will commercial contracts be handled? Are companies prepared to deal with each individual member states’ requirements for setting up a commercial presence? What implications will this have on company structure and the foundation of a business that operates internationally?
Brexit and Cyprus: How Do the Advantages Compare?
UK citizens with businesses should be considering strategies in preparation for a no-deal Brexit and Cyprus is a top choice in jurisdictions offering some of the most benefits for company relocation.
Cyprus has an attractive tax regime in the EU with a low corporate tax rate of 12.5% and full EU compliance that has encouraged many companies interested in optimizing their taxes to make the move to this EU member state. Other EU jurisdictions that are popular choices have much higher corporate tax rates, such as Malta at 35% and Belgium at 33.9%.
There are many additional tax incentives such as no withholding tax on dividends or interests, no capital gains tax, no succession tax, and over 60 double tax treaties. Some EU countries impose high tax rates such as the Netherlands, with a withholding tax rate on domestic dividends of 15%.
For UK citizens living or working abroad, there are many tax exemptions for non-domiciled foreign nationals and new tax residents.
The tonnage tax for shipping companies is also highly favored for businesses in the EU.
High-quality infrastructure, an English-friendly environment, and the ease of doing business in Cyprus also make it an effective business center for many companies and entrepreneurs hoping to get ahead without the hassle of being directly engaged in daily business operations. Unlike countries such as Switzerland, Cyprus allows companies to be completely foreign-owned, a benefit to UK business owners hoping to survive Brexit without major changes to their business operations and structures.
Business owners are facing time constraints and pressures of a no-deal Brexit and Cyprus offers one of the quickest, stress-free processes to setting up a business in the country.
The Intellectual Property (IP) regime has also drawn many companies to the country instead of jurisdictions such as Greece or Germany in order to secure better protections and security for their work.
As one of the fastest growing economies in the EU and with a location in the middle of Europe, Africa, and the Middle East, Cyprus is an excellent choice for businesses who work internationally and want to stay connected to the EU and other international markets. Access to investment opportunities as well as a pool of talented, educated professionals are also driving forces behind Cyprus’ growth.
Another aspect garnering attention for Cyprus is its film industry incentives which has made it just as competitive of a destination as Ireland for tax and film benefits. Ireland might have seemed to be the winner of Brexit and Cyprus is definitely a strong contender against Ireland with attractive tax policies, film production benefits, a growing market, and unique geopolitical location with an ideal climate and culture for filming.
Foreign nationals also find Cyprus much safer than the UK or other parts of Europe whilst they experience a high quality of life with relatively affordable living expenses when compared to the UK. From national healthcare, low-cost high-quality educational institutions, cheaper real estate options, and more favorable climate conditions, Cyprus makes the transition from the UK to the Mediterranean easy for UK professionals and their families, often improving the overall lifestyle of many new residents.
Relocating a Business to Cyprus: A Brexit Solution
The Aspen Trust Group has been assisting international businesses in all industries to optimize their businesses and find the right relocation jurisdiction. Our professionals can help you understand the possible impacts of Brexit on your business operations and craft tailor-made solutions for Brexit and beyond. We understand the complications and uncertainties related to Brexit and Cyprus might be the key in thriving in a post-Brexit business market. Contact us today to consult about your future and let us help you find the right solution.