Is Ireland the Answer?
You’d be forgiven for feeling a little bamboozled regarding the current shape of Brexit. Regardless of whether you are a supporter or opponent of Britain’s exit from the European Union in March 2019, many agree that the conflicting information from countless news reports, political arguments and street-level debates has done little more than cloud the facts. Like the storm around GDPR earlier this year, confusion has led some to bury their heads in the sand and hope that a decent and minimal-impact resolution can be found.
Despite the feeling of information overload and frustration on both sides of the argument, those at executive-level in UK businesses must responsibly prepare. The UK is leaving the EU in less than three months’ time, and Theresa May’s “final” deal has been widely met with disapproval by Parliament. To try and regain control amidst the cabinet confusion and media madness, businesses have to develop an overarching contingency plan to ensure they retain access to EU markets and shore up their existing position in the UK, or at least make themselves keenly aware of the options.
The UK, Ireland and the Brexit Backstop
The issue of the Irish-Northern Irish border and the proposed “backstop” is one of the most hotly-disputed elements of Theresa May’s Brexit deal which will be voted for or against on December 11th.
Because the Republic of Ireland and the UK are at present part of the EU single customs union, goods do not need to be inspected at the Northern Irish border for customs and standards. However, the UK’s proposed exit from the customs union and single market means that goods would need to be checked as they enter the Republic of Ireland to ensure they meet EU regulations – this would entail some kind of hard land border situation, creating potential friction and jeopardising the Good Friday agreement drawn up 1998 to bring peace to the Republic of Ireland and Northern Ireland.
Both the EU and UK want to avoid a hard border to save the Good Friday agreement. An alternative is the idea of a protective “backstop” – but what this really means for the passage of trade has been difficult to agree on.
One form of the backstop sees the separation of Northern Ireland from the UK from a trade perspective, meaning that the customs border is then moved into the Northern Irish sea and any goods coming from mainland UK into Northern Ireland or the ROI would need to be checked there for EU compliance. While this would ensure avoiding a hard border between the ROI and Northern Ireland that could reignite dissent and instability, some, including Northern Ireland’s dominant part the DUP, argue it could irreparably damage the union between Northern Ireland and the UK and leave the in a kind of EU purgatory.
As a kind of compromise, Theresa May’s deal has agreed with the EU what she calls an “insurance policy” – while not officially separated from the UK from a trade perspective, Northern Ireland will continue to be governed by some rules of the EU single market in the event that a preferable solution is not found by the end of the Brexit transition period in December 2020.
This backstop arrangement also involves a temporary single union, keeping the UK in the EU customs union until it is agreed that is no longer necessary – something that Leave voters vehemently oppose as it means an indefinite extension of the relationship with the EU with no say in its governance. However, the EU have been definite that this is the only deal left on the table.
The situation of the Irish backstop illustrates the ill-defined and potentially unstable trade relationship between the UK and the EU post-Brexit – and the vague nature of this relationship will undoubtedly create challenges for UK companies exporting goods and services after March 2019.
Bypass the Backstop Bother: Set Up in the Republic of Ireland (ROI)
There are still multiple ways Brexit could play out, and very little time to second-guess them all – an overarching contingency plan is vital. Mauve’s own strategy over twenty years of operations has been to manage risk by building a broad network of entities globally; if all resources and revenue are channelled through one central location, you become increasingly exposed to the risk of challenging socio-political or economic circumstances in that country. By adopting a strategy of internationalisation, that risk is spread and other locations in your network can pick up the slack in the event of crisis in one specific place.
By opening an ROI company, British organisations are able to build a post-Brexit strategy, spread potential risk and similarly reap the benefits of a business-friendly local climate. Setting up business in Ireland is also of benefit to external countries looking for a robust English-speaking European base; the Republic of Ireland’s economy has been buoyed in the past 5 years by the influx of global corporations such as Google, Facebook and Intel. This plan of action is not solely of advantage to large corporations – the Republic of Ireland has placed great focus on incentivising and incubating start-ups and SMEs to stimulate an accessible business environment.
Some of the perks of ROI company set-up for UK and external businesses include:
- Low corporate tax rates for domestic and overseas companies (12.5%)
- English-speaking, skilled and educated workforce
- Close proximity to UK for logistical and business travel purposes
- Resilient economy following recession
- Similar legal system to the UK
- Political stability
- 25% tax credits for companies engaging in research and development
- No restrictions on company ownership for non-Irish residents
- Lower operating costs than London and other European cities
- Better cost of living in key cities than other European capitals
- A popular target for post-Brexit relocation – the likes of Barclays, Lloyds, Bank of America, JP Morgan, Royal Mail and Next have moved jobs from London or set up new entities in Ireland as a direct result of Brexit.
Whether UK-based or beyond, your organisation may benefit from setting up a company in the Republic of Ireland – and Mauve will do the hard work for you, strengthened by the recent appointment of local staff to meet demand. Our new Dublin-based Business Development Representative Teresa Lewis is ready to answer your enquiries – get in touch today via the Contact Form or email@example.com, and we’ll discuss your options in a free consultation.