After the United Kingdom’s choice to cease to participate in the EU’s Single Market and Customs Union and put an end to the free movement of persons, goods and services with the EU as of 31 December 2020, the EU-UK relationship has changed significantly for businesses on both sides.
As of 1 January 2021 Brexit has affected trade in goods, provision of services, company law and civil law for contracts and jurisdiction clauses, data handling and digital and intellectual property rights. EU businesses that currently buy goods from the UK and place them on the EU market will become importers while those that currently distribute products to the United Kingdom will become exporters. This means that they will need to comply with a new set of EU applicable regulation. UK incorporated companies will be third-country companies and will no longer be automatically recognised. Their recognition will become subject to national law for third country-incorporated companies. Branches in EU Member States of UK incorporated companies will be branches of third-country companies. Subsidiaries of UK companies in the Union are, in principle, EU companies and will continue to be covered by all relevant Union and national legislation.
British businesses that export to the continent are being encouraged by government trade advisers to set up separate companies inside the EU in order to get around extra charges, paperwork and taxes resulting from Brexit. UK small businesses are being told by advisers that the best way to circumvent border issues and VAT problems that have been piling up since 1 January is to register new firms within the EU single market, from where they can distribute their goods far more freely.
Republic of Cyprus, a full member of the European Union and Euro zone, stands out as a unique destination company establishment and UK companies’ relocation or establishment of a branch. Cyprus benefits greatly from the European Union single market, meaning the free movement of goods, services, people, and capital. It enjoys the advantages provided by the EU Parent/Subsidiary Directive, Mergers Directive and the multitude of the EU trade agreements. Apart from that, Cyprus has signed 65 double taxation avoidance agreements, including ones with the UK, the USA, Canada, China, Russia, India, Germany, France, UAE and many other countries presenting a profitable opportunity for business.
Especially for UK businesses that want to retain their access to the European Union single market, reasonable regulation, the Cypriot legal system, the broadly spoken English language, its geostrategic position between Europe and the Eastern markets, the low corporate tax rate, and the country’s stable economy are additional advantages. Cyprus can provide an ideal stable environment for investment and international profitable business.