Nine months since Brexit: What are the trends?

Brexit has been a reality for quite some time now. As of January 1st, 2021, the United Kingdom (UK) is no longer part of the European Union (EU). The withdrawal from the EU has various consequences from a tax perspective. Additionally, many companies have adjusted their business operations as a result of Brexit. These adjustments may also have tax-related consequences.

In the run-up to Brexit, the main focus was on setting up VAT and customs processes in order to guarantee the continuation of deliveries to and from the UK. Now that the situation is starting to stabilise, we see more and more companies assessing their business models and supply chains, with a view to making business between continental Europe and the UK easier.

Consequences for businesses

First of all, we see many businesses switching to the direct importing of products, originating from for example China, into the EU. In other words, the supply chain now runs directly to the EU, without involving the UK. Also, we see with increasing frequency that certain activities related to the sale of goods in the EU, are relocated from the UK to the EU. For example, businesses perform their after-sales services for the European market from a warehouse in the Netherlands, or establish an office in the Netherlands from which they perform their European sales and marketing efforts. These changes may have a significant impact on the position of a business, when it comes to the taxation of profits (direct taxes). For example, relocating activities may lead to tax liabilities in countries where this was not previously the case.

International (tax) issues

During the process of restructuring your business model or supply chain, you may face complicated international (tax) issues. For example, when is relocating activities worth the effort? Which specific activities should be relocated? Have you considered the legal form: a separate legal entity or a branch? When will these choices lead to local tax liabilities, and how can you ensure compliance with local rules? What types of cross-border tax aspects are involved?

Our advisors work on solving these kinds of issues on a daily basis.

Are you in need of assistance in the area of international taxation? Are you looking for an advisor to help address issues regarding your post-Brexit business model and corporate structure? Please feel free to reach out to us. Our tax advisors and transfer pricing experts would be happy to assist you.