Nearly four years since the referendum, Brexit is officially coming into law on the 1st of January, 2021. As CFOs for startups, we know that preparation for Brexit can seem daunting. That’s why we’ve created a checklist specifically geared towards Founders. You can download the Checklist here:
As a result of Brexit, UK businesses will need to comply to an extensive set of new legal requirements which will likely affect most. Those who don’t comply risk receiving fines and potential prosecution, so it is crucial for business owners to be aware of these changes, understand how their Company may be exposed, and get prepared ahead of time. To help, we’ve put together a checklist covering the key impact areas founders should be most aware of, where you can get more information, and what you should consider to adequately prepare.
As a summary, here are the key topics we cover:
- Employment: Companies can no longer freely hire EU nationals. If you are planning to make hires abroad, you will now need to apply and get approval for a skilled worker visa to do so. Alternatively, you will need to consider setting up a foreign entity or employing a PEO service to hire on your behalf.
- Trade: the UK and EU are still negotiating trade terms, which will dictate what tariffs and taxes will apply to which categories of goods imported/exported between the two. Regardless of the outcome, there will likely be some changes which will require new customs clearance, updated labelling, and/or new tariffs procedures. It is important for all companies trading with the EU to keep track of the latest guidance, check their existing licensing and apply for relevant grace periods.
- Data sharing: A decision has yet to be made on whether Data sharing regulation will come across under Brexit. If your Company holds EU customer information on it’s servers, it is important to check you are currently GDPR compliant, and in the case the rules change, as a starting point you will need to review your Company’s agreements with its Service Providers and set up Standard Contractual Clauses.
- Taxation: From 1 January 2021 businesses will need to pay the appropriate VAT rates for all goods imported from EU-member states. In turn, UK businesses will be able to charge customers zero-rate VAT (0%) on most goods exported to the EU. Withholding tax costs for some businesses may increase post-Brexit, since exemptions provided by EU directives may no longer be available. Companies should speak to their accountants, and inform themselves on what changes apply to them.
- Borders & Travelling: British citizens will not need a visa to travel to the EU until further notice. That said, British citizens looking now looking to move to and work in an EU country will likely need a work permit and need to apply in accordance with that country’s immigration rules.
Given that a lot of these rule changes are still being negotiated, we urge business owners to educate themselves on which areas may impact their business. Preparing now will ensure that whatever the outcome, you will face minimal disruption and legal risk, getting through these hurdles as smoothly as possible.
For more information or guidance feel free to contact us on Contact@ralston.co