UK small business owners shall seriously prepare for Brexit. Plenty of uncertainty exists around precisely what Brexit can mean for the European trading. UK small businesses need to prepare for the leave and examine their business strategy. They need to decide wherever any adjustment is required.
The British government published a report in November 2018 that said leaving without a deal would result in the UK economy being 7.7% smaller 15 years after Brexit. The damage would be even greater if net migration from the European Union substantially dropped, the government said.
The Bank of England warned in its report that a disorderly Brexit would cause the UK economy to contract by 8%. The value of the pound would slump by as much as 25% and home prices could plummet 30%.
Membership of the EU's single market and customs union allows for lorries and ships to carry goods between any two points in the bloc. SMEs shall evaluate the risk imposed on their businesses and assess if Brexit will disrupt their trading. The risk assessment could mean checking possible effects of border controls, customs declarations, delayed deliveries and additional expenses caused by the tariffs levied.
The services industry, which accounts for around 80% of Britain's economy, will also face challenges. Numerous banks and firms operating in London have had to establish bases on the continent in the event of a no deal. After leaving the EU’ single market UK firms will face difficulties in invoicing their EU clients, business partners and or private consumers. The EU has a range of measures that simplifies and eases intra-community service delivery and administration – hindrances the UK companies will face after the Brexit.
Establishing a Hungarian company is an exceptional tool to mitigate the disadvantages of Brexit.
Such special purpose vehicle (SPV) established in Hungary will allow UK small firms to maintain their business in the EU region and continue to benefit from accessing the single market. The immediate benefit of forming a company in Hungary is that it will allow trading within the EU without customs and tariffs, invoice business customers without charging VAT and administer their trade and service activity by the EU legislation.
The SPV can be operated from the UK while through the Hungarian subsidiary you will enjoy accessing the EU market.
Through a Hungarian company formation you will enjoy even more benefits, for example strategic location, well-built infrastructure, widespread government e-services, as low as 9% corporate tax, no withholding tax and no dividend tax.
For details about company formation in Hungary check out our services at AccountingBudapest.
Our clients already enjoying the benefits of a Hungarian subsidiary
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