Brexit: The impacts on small businesses
What is Brexit?
On June 23, 2016, the UK voted to leave the EU which invoked article 50, the only legal mechanism for which a member state can leave.
January 31, 2020 marked the date in which the UK formally left the EU triggering a transitionary period for which the UK and EU form a post Brexit relationship and negotiate for a new trade deal. During this time Brussels and UK Parliament must agree upon proposals within the new trade deal, similarly all 26 EU member states must also agree before they are imposed.
The transition period ended on December 31, 2020 whereby the new UK-EU trade deal was secured and implemented from January 1, 2021.
How does this affect international trade?
To export goods to the EU or import goods from the EU, UK businesses will now be required to make customs declarations and additionally some goods may need export licenses or certificates. Businesses should be prepared for a lot more checks, processes and rules, and must ensure they plan and prepare in order to continue global trade with ease. The main changes small businesses need to be aware of are importing goods from the EU, exporting goods to the EU, providing services to the EU and working in the EU/UK.
Thankfully, the secured trade deal mitigates a lot of trade issues UK firms could encounter with the EU, allowing UK trade to continue within the EU market, including as business travellers and cross-border services suppliers or investors whilst being treated no less favourably than either EU businesses or competitors from third countries
What if I'm a UK Business Registered in the EU?
If you have a UK business, you might face restrictions on your ability to own, manage or direct a company registered in the EU, Switzerland, Norway, Iceland and Liechtenstein.
You should be prepared for:
• Additional requirements on the nationality or residency of senior managers or directors
• Limits on the amount of equity that can be held by non-nationals
UK companies and limited liability partnerships that have their central administration or principal place of business in certain EU member states may no longer have their limited liability recognised.
Data transfer and GDPR
As part of the wider UK-EU Trade and Cooperation Agreement, the free flow of personal data from the EU, Switzerland, Norway, Iceland and Liechtenstein to the UK will continue after 1 January 2021 for no longer than 6 months, until adequacy decisions come into effect.
As a sensible precaution during this 6 month period, it is recommended that you work with organisations who transfer personal data to you to put in place alternative transfer mechanisms to safeguard against any interruption to the free flow of EU to UK personal data.