The uncertainty around Brexit has left many UK businesses that operate or trade in Europe with a sense of despair. Especially when faced with the threat of decreasing investments, and shrinking business confidence and profit margins if the UK leaves the European Union (EU) without an adequate enough deal. Soon enough, UK businesses will be on the outside looking in along with other entrepreneurs from outside of Europe who don’t have access to the financially beneficial European Single Market.
This excludes companies, both small and large, from unrestricted access to European investment, business opportunities, and by extension, the free movement of people, limiting those all-important business trips. Businesses in countries with an EU membership or those with international trade deals in place have access to all of the former without the need to negotiate or secure trade deals and pay tariffs. What’s more, companies within the single market have access to millions of consumers to trade with. So does this spell the end for UK businesses and the ultimate collapse of the British economy? The short answer is – probably not.
Entering the EU Single Market and operating within it
Trading within the EU gives businesses access to the lucrative Single Market and untapped access to a ‘home market’ of approximately 500 million consumers to trade with without any restrictions. The benefits of this can’t be overstated, and maintaining an active presence in the EU will significantly expand your potential customer base. What’s more, you’ll be able to operate under the Eurozone, which enables you to bank in Euros and benefit from the Single European Payments Area (SEPA). This makes the majority of payments between EU member organisations free of charge and seamless, thanks to all European countries adhering to similar banking processes.
An EU membership also means that businesses benefit from increased business confidence and investment, due to the European commission’s objective to not only ensure the free movement of products within the market, but also to ensure high safety and operational standards for consumers. In addition, the EU requires businesses to adhere to strict regulations for operation that gives your company a level of trustworthiness among potential investors from within the EU and outside the continent that can’t be afforded elsewhere.
Location independency: trading in the EU, when you’re out
There are a number of ways to start a business in a European country that can give you access to the EU Single Market. For example, some business owners opt to open their companies with the European Business SE (Societas Europea), a type of LLC company statute that enables company owners to run their business in any European country with the use of a single set of rules and regulations. To establish a European Business you must abide by a strict set of requirements including registering the company’s headquarters in a European country, maintaining a presence in more than one European country and having a minimum capital of €120,000.
While this might seem like a great example of a practical and efficient way of setting up a business within the EU, it isn’t necessarily a solution for all, especially for owners of start-ups, microbusinesses and SMEs who don’t have a physical address or a large amount of share capital. In fact, this is rather restrictive for entrepreneurs looking to setup start-ups and microbusinesses.
Estonia has in recent times provided a unique and seamless solution for driven entrepreneurs with great ideas who don’t necessarily have the resources to start a business the traditional way through their e-Residency programme. By becoming an ‘e-resident’ of Estonia, you’ll be able to start and run a business in the country, without ever having to be based there geographically. What’s more, the process is completely digital and lacks the painstaking bureaucracy that comes with other similar initiatives. You simply fill out an online application form, pay a one-time €100 administration fee, collect your digital ID card and then start your European-based business.
The benefits of trading within the EU are incredibly lucrative, and making sure you’re within means to do so to gain access to European investment and business opportunities is paramount. Whether you’re a UK business owner whose trading rights are set to change after Brexit or if you’re looking to enter the European single market, the time to incorporate a business within the EU is now.
By Allan Martinson, CEO of LeapIN
