“Should I set up a company in the EU” is among the most common questions we receive now that the UK has left the single market.
However, the answer isn’t always as straightforward as yes or no. There are both advantages and disadvantages to registering a company in the EU.
What is an EU subsidiary?
An EU subsidiary is a company belonging to you, but registered in the EU for VAT and customs purposes. You usually only need one EU subsidiary, but there is no limit to the number you can set up.
Why should you set up an EU subsidiary?
If you commonly move goods across the EU, an EU subsidiary may help you bypass new customs processes established after the UK left the EU earlier this year.
This is because an EU subsidiary is considered a European company and is, therefore, assumed to follow EU rules and regulations when manufacturing or trading products. This means less paperwork for you.
Do note, however, that goods moved between the UK and the EU (including Northern Ireland) are still subject to the new customs processes, regardless of whether you have an EU subsidiary or not.
Why shouldn’t you set up an EU subsidiary?
Setting up an EU subsidiary is costly. You may have to pay for new headquarters and staff and take on additional administrative duties.
That said, the benefits of doing so may outweigh the time and financial investment.
How do I set up an EU subsidiary?
To set up a new company, you will need to acquire a registered address in the EU country of your choosing and create a company with the local business department