Financially efficient ways to source and supply the EU from the UK

Since the UK and EU adopted the post Brexit trading arrangements in January 2020, it has proved increasingly difficult and expensive for businesses to trade across the border.

Things are difficult enough in a straightforward import or export situation; however, where a UK business is sourcing product outside the UK for resale outside the UK, the challenge and expense are compounded. In this situation, the options are:

1) Carry on as normal and pay the inbound and outbound duties and VAT, plus paperwork

2) Cease trading with non-UK customers

3) Source product from the UK and export

4) Establish an entity in the EU for non-UK sales and logistics

5) Allow the supplier to deal directly with your customer

Option 1 is often not possible or economically viable, option 2 is damaging while option 3, if possible, may eventually lead to option 2. Option 4 can be complex and expensive and require local in-country representation. More generally, navigating different laws, language, and culture in addition to maintaining an existing business is a daunting task. Option 5 is frequently the only route left for UK businesses.

This was the situation facing the directors of a Mount Business Services (MBS) client. Our client holds the UK and Ireland licence to distribute high accuracy surveying instruments from Germany. Pre-January 2020, equipment was purchased and shipped from Germany to the UK & Republic of Ireland and invoiced through the UK. Post January 2020, this process became prohibitively expensive, labour intensive and time consuming.

MBS supported the client by establishing an EU entity that requires virtual e-residency for a company director and uses online reporting of VAT and year-end reporting. Any issues requiring local input are managed by MBS on the client’s behalf through an associate representative office. English is the language of business; local tax law is straightforward with a double tax treaty in place with the UK for the submission of dividends back to the UK and the country’s business law follows standard European and UK Company Law.

Our client’s EU business has provided a frictionless way of supporting their non-UK and EU clients, in turn enabling them to retain and grow their business in Ireland. Additionally, the proactive approach has enhanced their relationship with the Original Equipment Manufacturer in Germany.

If you are facing similar issues and/or are looking to expand into Europe but cannot afford the time or expense required to make it work, don’t hesitate to contact me at andy.eaton@wearembs.co.uk to discuss how we can help.