While the true implications and ramifications of Brexit are still not fully understood, many corporations have already moved their headquarters and operations from the UK to elsewhere in Europe. This is mainly due to decreasing business confidence, a decline in investment opportunities and a negative impact on profit margins if the UK leaves the European Union (EU) without the right (or any) deal in place.
The imminent reality of no longer being able to benefit from unrestricted access to the ever lucrative Single Market, which includes over 500 million consumers to trade with freely, is similarly forcing many micro-business owners and independent professionals to rethink their future plans and strategies.
A future that doesn’t include being able to operate under the Eurozone as part of the Single European Payments Area or with access to the free movement of products undoubtedly looks daunting. It’s therefore not a surprise that faced with the threat of narrowing margins, increasing trade tariff costs and taxes, many companies are looking at relocating or at least establishing new operations elsewhere within the EU.
However, there is a way for micro-businesses, independent professionals and freelancers to continue to maintain, or even gain, a European presence and access to the investment, business opportunities and talent that accompany this without having to pay costly tariffs or endure the upheaval of relocation. That is to set up a location independent business.
The rise of location independent businesses has in large part been driven by e-Residency, an Estonian government-backed programme offering transnational digital identity to anyone in the world interested in administering a location independent business online.
This is a unique and alternative solution to the European Business SE (Societas Europea), which is a type of LLC company statute favoured by many companies around the world. However, while the European Business SE enables you to operate a business in any European country, provided you adhere to the EU rules and regulations and that your business is an EU member state, it is not a solution that is necessarily a good fit for the 5.4 million micro-businesses in the UK.
To establish a Societas Europea type of company, you need to maintain a presence in more than one European country and have a minimum capital of €120,000. This is not something that businesses at the smaller end of the scale, which are the fastest growing type of business in London, will be able to meet.
The e-Residency programme can however offer a viable alternative. The initiative was designed for business owners from across the world who don’t necessarily have the means to start a business the traditional way within the EU. It enables hopeful entrepreneurs and micro-business owners to be established as ‘e-Residents’ of Estonia, giving them the legal requirement to start and run a business in Estonia and by extension access the EU Single Market, all without the need to be based there geographically.
What’s more, the process of incorporating a business through this initiative is quick and simple as it’ completely digital. It offers a seamless all-in-one solution for incorporation, taxation and identification, thereby saving independent professionals and micro-business owners from the mundane and painstaking bureaucratic administration processes they’d otherwise have to go through. 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 being in a position to do this post-Brexit and continue to gain access to European investment and business opportunities is paramount to the future of businesses across the UK and wider Europe.
Whether you’re a 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.