After last weeks stranded meeting in Brussels, it is even more important for companies to prepare themselves for a variety of scenarios when it comes to a Brexit in the near future. Beginning to review your operations in order to identify business-critical areas which can be impacted by Brexit is far from a “second priority” activity, regardless of how the actual negotiations end up. Below, we list a number of the areas which we believe the majority of companies and organisations should investigate in this context.
Last week, the EU countries’ prime ministers and heads of state met in Brussels to discuss the situation regarding the Brexit negotiations. As is known, the meeting ended without the parties being able to agree on the way forward. Discussions during recent days have shown that the greatest hinder in this process is how the border between Ireland and Northern Ireland is to function, in practical terms. The hope has been that the EU and the UK can hold a decisive summit on Brexit in mid-November, whereby the premises for the UK’s withdrawal will be determined. Given the outcome of last weeks discussions, this will probably not take place.
The EU and the UK previously entered into a transition agreement. Briefly, this agreement implies that the EU framework would continue to apply in the UK and that the UK will contribute to the EU budget until 31 December 2020 However, the problem is that the transition deal only comes into effect if the parties can enter into a withdrawal agreement (that is, if they can agree on how the EU’s exit from the UK will take place in practical terms and on what the relationship between the EU and the UK will look like after such an exit).
In spite of the fact that no one knows with any certainty how this process will finish, both the UK and EU are encouraging companies to prepare for a hard Brexit.
- Identify the consequences of the changes in VAT, customs and excise duties which Brexit could have on your operations, for example, the reporting and registrations which could be required, and what this will cost in terms of administration and customs duties?
- Obtain information as to what Brexit can imply from a regulatory perspective – this particularly applies if you operate within an industry which is heavily regulated by the EU, for example, pharma or FS.
- Investigate as to whether you have employees who can be impacted. Brexit will probably affect the possibility of citizens in other EU countries working in the UK, as well as the possibility of UK citizens working in EU countries, which can trigger personal taxation, as well as migration issues.
- Analyse your suppliers supply-chain. Is there a stage in the chain which can be significantly impacted by Brexit?
- Review your agreements and contracts. Do these need to be re-negotiated with consideration of the forthcoming changes? For example, do your operations involve tight time schedules in terms of deliveries, which could be negatively affected by time-consuming border controls?
- Review your data. Do your operations require, for example, that personal data be transferred between the EU and the UK? Do you need to update your ERP system to produce important details for, for example, handling customs?
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