Big companies have backup subsidiaries in the Netherlands as insurance for a hard Brexit

The globally anticipated Brexit date (the 31st of October) is approaching rapidly and this is beginning to cause a lot of stress among many British investors and entrepreneurs. If you own an UK based company and have not really thought about the possible consequences of a hard Brexit, now might seriously be a good time to evaluate your options.

A lot of other organizations have already preceded you and opened a branch office in the Netherlands. Some multinationals even moved their entire headquarters to Amsterdam or Rotterdam. The main reason for this course of action is pretty simple: continued access to the European Single Market with all its profits. Because once you are out, you will no longer reap the benefits of being part of the EU and this might lead to rather large problems in continuing your normal business operations and activities.

The European Single Market explained by the European Commission

“The single market refers to the EU as one territory without any internal borders or other regulatory obstacles to the free movement of goods and services. A functioning single market stimulates competition and trade, improves efficiency, raises quality, and helps cut prices. The European single market is one of the EU’s greatest achievements. It has fueled economic growth and made the everyday life of European businesses and consumers easier.”[1]

Being locked out of the European Single Market: some consequences for your business

If your UK business is currently dependent on employees and freelancers from different EU countries, you will find that you will have to deal with many arising issues. The terms of the contract between you and them will obviously change, since EU legislation will no longer be applicable in the case of a hard Brexit. This might result in both freelancers and employees looking elsewhere for a job, simply because the terms of employment will become too complicated.

Another massive issue will be traveling. As the borders will become real borders again between the UK and every EU country, this obviously means there will be a substantial rise in documents, visas, various travelling documents and several other bureaucratic consequences that will take up a lot of time. Clients will have to spend more effort in order to travel to you and vice versa.

Then there is also the fact that the import and export of goods and services will be severely influenced in a negative way, mostly because of the extra time every shipment will take. If you have an online business or web shop, sending goods to your EU clients will prove a challenge you might not even be up for. Some goods will become less available for import, which inevitably will lead to shortages and higher prices that a lot of small businesses cannot pay if they want to remain profitable.

There is a solid possibility you might lose a few clients

In other words: if you do not open a subsidiary in an EU country, you might have to consider the fact that your business might not make it by the end of next year. However dramatic this may sound, it is a very realistic vision for many small business owners and large organizations that are dependent on EU clients. It is therefore absolutely no surprise that a lot of companies have established branch offices in the Netherlands, of which some are inactive totally, basically awaiting what will happen from the 1^st of November.  In the case of a hard Brexit, these subsidiaries can be put into action immediately, so the company does not have to suffer from the exclusion from the EU.

Intercompany Solutions can inform you about all the possibilities of opening a backup subsidiary in the Netherlands. If you want to know more, please always feel free to contact us for more information or a personal quote for your business. The good news is, that establishing a company or branch office in the Netherlands can be done in just a few business days. Which means that you can be ready before the date is here, just give us a call.

[1] European Commission. (2017, 5 July). The European single market - Internal Market, Industry, Entrepreneurship and SMEs - European Commission. Link: https://ec.europa.eu/growth/single-market_en