Five things to watch in the post-Brexit climate for Australian businesses doing business in the UK and in the European Union
Putting my disappointment aside to see the UK leaving the EU, now is the time to watch how things will evolve. And for me how it will impact our clients in the coming months or more likely years.
This article highlights of 5 areas that will change in the coming months. These areas are Tax, Intellectual Property, Norms, EU funding and Staff. The UK leaving the European Union has a direct impact on trading with Europe for Australian companies.
This is totally a work in progress and needs to be watched month after month. Business is expected to continue as usual until the UK is officially leaving the EU. It is estimated to happen within two years from now.
Value Added Tax and Import Duties need to be watched
One of the benefits of trading among EU member countries is that you do not pay custom duties in the EU. The EU also has defined import duties for each category of products to be paid when a EU member imports a product from a non-EU member.
It means Australian companies, will need to watch what import duties will be applied by the UK once it officially leaves the EU. It may well be different from the EU in the near future.
The other area to watch will be VAT. Swati Dhingra, Assistant Professor of the London School of Economics explains it simply: “Britain would not have access to the coordinated VAT collection of the EU. So a 20% VAT would need to be paid at the UK border, and the importer would no longer have the convenience of combining this with domestic VAT payments.”
These two points will be important to watch in the coming months and year.
Intellectual Property protection: One application for the EU and one for the UK?
Australian companies currently applying to protect their Trademark through the Madrid Protocol get to register their trademark in 97 countries in one application. The European Union (EU) is part of the Madrid Protocol.
In addition, if you would like to register your patent in the EU you currently will have to lodge an application for your patent to be valid in the 28 countries of the European Union.
Now if the UK exits the European Union, the question is in the UK market what will happen to your IP you have registered it under a EU banner, Europe-wide. It is clear that current applications will keep covering the UK, as part of the EU.
When the renewal comes up, or when a new application will need to be lodged, you will need to look again at what the UK has negotiated with the European Union.
European Union Norms: What about CE Mark?
In terms of norms, the European Union has harmonised its standards. It means that for example, a product which is CE marked, does not need in many cases to get additional certification.
Now once your products are CE marked, will the UK recognise as a valid standard? Hopefully yes, but what happens if not? In that case, the UK would have to create their own set of standards or negotiate with the European Union to use their set of standards. It would then mean that you would have a certification process for the UK and one for the EU.
Cost wise, that will have to be taken into account. Two certification processes instead of one? Let’s hope an agreement is found with the EU there as well.
Access to EU funding
Today, I was at one of my Australian clients. They have established a company based in the UK in order to access a European Union funding. Now they already anticipate to have to move their company either to Germany or the Netherlands if they want to keep benefiting from this funding over time. The CEO was telling me, he thinks they have no chance to get a EU grant again if they are based in the UK. It is the unknown right at the moment, but it will definitively need to be considered if you have a technology that can fit into some of the project that the EU is funding.
Travel of your Staff, hired by your UK company, within the European Union
If you have an established office in the UK and you have staff flying in and out of the UK to do business with the rest of Europe, then they will probably will have to go through a visa process for business visits. Depending on what the UK is able to negotiate with the EU, it might be a simple process. The minimum expectation is that it should work like other non-EU member, such as Swiss citizens.
When it comes to posting a staff, hired by your UK company for several months for projects in the European Union, then work permit arrangements will probably change.
If you want to read more, I found these articles below to be useful. This is still a lot unknown, and these five points will need to be watched by Australian companies doing business in Europe in the coming months. If you would like to discuss further, contact me on [email protected] or arrange a call on 02 8068 9155.
Articles to read:
About Tax and Custom Duties: