How UK businesses can avoid the pain of a hard Brexit

Will there be a viable deal to avoid a hard Brexit, and how will businesses who want to continue trading with the EU’s 27 member nations avoid disruption and crises?

Member states are set to consider the latest UK Chequers proposals later this month, but the Irish Taioseach Leo Varadkar has already said Ireland will not accept the time-limited backstop for the Northern Irish border being proposed by the UK.

All the while, the date of Brexit, March 29, 2019, is looming.

One method of businesses avoiding the hardships of a no-deal Brexit is to establish a base in another EU member state.

Even the UK government is now suggesting that certain companies consider moving their headquarters to another EU country.

In an advice paper entitled “Structuring your business if there’s no Brexit deal”, the government advises businesses incorporated under EU corporate law that moving to a country which is still a member state may be better for their business.

European companies which are “societates Europaeae”, a system brought in 14 years ago to help businesses operate easily across borders, won’t be able to operate in the UK under a hard Brexit.

They will have to legally incorporate in another country or convert to a British-only plc.

This advice affects major international companies such as Allianz, Airbus, and E.On.

The UK government says not all of these societates Europaeae can convert into British public limited companies. They must have been registered as a societas Europaea for at least two years or have had two sets of annual accounts approved.

The advice says: “They may also want to consider whether they wish to move their seat of incorporation to another EU member state.”

The advice comes as an increasing number of UK companies are looking to create European subsidiaries to ensure they have a foothold in the EU whatever the outcome of the Brexit negotiations.

For many, the obvious choice for a European base is Germany – the powerhouse economy of the EU.

British/German dual national Marc Jarrett, Managing Director of Sussex-based Emjay Consultancy Ltd,

is focusing on helping both US and UK businesses establish themselves in Europe's largest market, Germany.

He said: “The real prospect of a hard Brexit if the UK’s proposed deal is blocked or rejected means an increasing number of UK companies are proactively pursuing this option as a form of hedge or insurance policy.  EU-wide companies are also considering whether their incorporation base needs to move out of the UK.

“Germany has a business-friendly tax and legal system and its central location within Europe makes it the natural choice for British companies looking to establish a subsidiary or branch office on the continental mainland.”

The most common legal company form is to establish a GmbH (Gesellschaft mit beschr?nkter Haftung) which is German for "company with limited liability". The owners (Gesellschafter, also known as members) are not personally liable for the company's debts. This is similar to a limited company in the UK.

Under German law, the GmbH must have a minimum founding capital, €12,500 of which must be raised before registering in the commercial register.

The company is run only by the managing directors (Gesch?ftsführer) who have an unrestricted proxy for the company and must be either a national of a European Union country or have a German work permit.

Shareholders, on the other hand, can be any UK entity, be it a person or a UK Limited company.

Other factors to bear in mind when establishing a presence in Germany include securing a business address, launching a German language website (local law dictates this must include an 'impressum' which outlines company details), appointing a good tax consultant, and hiring at least one German-speaking representative who can help during the formation period and possibly beyond.

Unlike in the UK, joining the local chambers of commerce is mandatory. However, doing so will allow members to grow their business contacts.

Emjay Consultancy Ltd helps with all the necessary aspects of establishing a presence in Germany including company formation, opening bank accounts, real and virtual offices, sourcing of staff, translation of website and marketing collateral into German. It has access to a network of professionals on the ground in Germany that can help with all aspects.

Mr Jarrett has also been helping a former international consultant and strategic planner in his search for financial backers to fund his battle against Brexit.

Jason Hunter, (pictured left) one of the 3 Blokes In A Pub videocast team, quit his well-paid job to tour the UK making the case for a vote on the outcome of the Brexit negotiations, and to campaign to stop Brexit.

His previous roles include strategic planning and management at multi-nation steel firms, managing consultant dealing with procurement for private companies and public bodies, and national sales manager for a company in the energy storage sector. He has lived and worked in the USA, Poland, Slovakia, Serbia, and the Netherlands.

He recently went to Geneva with the other two ‘blokes in a pub’ to investigate the potential impact of falling back on World Trade Organisation terms in a no-deal Brexit.

“While I help companies plan in a very uncertain time, I also assisted Jason by helping him to get a financial backer. He is crowd-funding his living expenses now that he has quit his job and is investigating and making public important aspects of the consequences of a no-deal Brexit,” Mr Jarrett said.

You can find out more about Jason Hunter's Go Fund Me appeal here: https://www.gofundme.com/help-me-stop-brexit-we-can-do-it

For more information on Emjay Consultancy Ltd company, visit https://brexitbeater.co.uk/