Ian has almost forty years relevant international experience in the financial services industry worldwide.
The Brexit saga rolls unsteadily on. There is clearly a huge amount of “Brexit fatigue” gripping the country – even if UK Prime Minister Boris Johnson pledged to get it done by the end of October “do or die”. It remains to be seen if the proroguing of parliament and lure of a general election helps or hinders the country from achieving its post-Brexit objectives (whatever they may be).
More than three years on from the “in-out” referendum, we are only approaching the end of the beginning. All the talk so far has been about getting us to a point where we can begin negotiating future terms with our European friends. Or “rump EU27” as the British press unkindly refers to the remaining 450 million population bloc.
For British businesses with European aspirations it will not be enough to ignore the new reality. For many, the opportunities afforded by setting up a subsidiary – or in extreme cases relocating altogether – to an alternative EU member state may be worth considering. But where to go?
I have been assisting clients in this area for the last fifteen years. Previously a senior director at one of the world’s largest independent trust and corporate service providers, nowadays I act as an independent consultant. It is my job to inform and guide individuals and corporates through these very questions. I have encountered several themes in the last three years as the pro- or anti- EU propaganda machines continued to spurt out their opinions – often completely at odds with each other.
EU countries are attracted to the potential new business that might emanate from a dynamic UK soon to be frozen out of the bloc’s protocols and membership advantages. Indeed several states have been proactively trying to secure their share of the cake.
Clear advantages may be had by setting up a subsidiary somewhere in EU27 – or even relocating there entirely. I am seeing demand for a number of “onshore” solutions by which I mean a properly constructed corporate vehicle in an EU member state. Any such establishment will be subject of course to the respective rules, regulations, tax implications and so on.
Malta is a fairly obvious EU destination for UK business owners given its previous British links, membership of the Commonwealth, language and so on. Malta’s infrastructure is well developed with robust legislation and a well-regulated finance centre where advice may be readily found. Moreover Malta has enacted a favourable corporate taxation regime and beneficial residency rules for those business owners seeking to create real substance (an ever increasing requirement these days).
A case can be made for establishing a subsidiary (or full relocation) in any one of the EU countries; in my time I have assisted and also made introductions to professional associates in almost all of them. Some are most definitely easier than others. One of them is Spain which may not be an obvious choice but in my opinion merits serious consideration.
I see Spain as becoming an increasingly important player in a post-Brexit EU otherwise dominated by the Franco-German axis. Moreover Italy’s domestic problems present a window of opportunity for their Iberian cousins. Spain benefits from a progressive multicultural society allowing access not only to a population in excess of 47 million but also exciting opportunities across Spanish-speaking Latin America. A wide range of Double Tax Agreements is in place and for fairly obvious lifestyle reasons relocating staff to the country does not seem to prove difficult!
Another option to consider is Gibraltar, a jurisdiction I called home for fifteen years. Whilst the territory will be leaving the EU as and when (or if) the UK exits it has always provided some interesting options when considering international expansion.
As always care must be exercised and professional advice taken from the outset but consider this: companies in Gibraltar that do not operate in the territory (for example holding structures) do not pay corporate tax and even where they do the rate is a flat 10%. There is no VAT, and other taxes on capital gains and inheritance do not exist. Again residency options abound and the national infrastructure is impressive and frequently surprise first time visitors.
We are living in fascinating and fast-moving times, to be sure. It is tempting to do nothing in the meantime and simply watch developments on the stage from the wings. But as my inbox demonstrates on a daily basis, this is not the approach favoured by all. Contact me at any time to initiate a discussion on incorporation in the EU and / or Gibraltar in readiness for a post-Brexit world. You may be in for a pleasant surprise.