2020 was supposed to be a “transitional” year where businesses prepared for Brexit. However, the Covid pandemic took over and many businesses are still very much unprepared for Brexit. This has the potential to be as big an issue for many businesses within Ireland.
The challenge of Brexit
The biggest tax challenge arising from Brexit is not corporation tax and income tax or VAT, but customs duties. If we don’t get this right, it could signal the end of cross-border trade in some industries Post-Brexit, and without a trade agreement, customs duties will typically add anything between 2% and 50% or even more to the cost of imports and exports between Ireland and the UK. Even if the outcome of Brexit talks between the UK and the EU results in free trade, there will still be customs controls applied.
Opportunities from Brexit?
Whilst there are many headwinds associated with Brexit, it shouldn’t be ignored that there are opportunities too. These are often overlooked. due to the prevailing view that Brexit poses unprecedented challenges to Irish businesses.
To prepare for Brexit and take advantage of any opportunities that it may bring, there are a few guiding principles:
Businesses should assess the potential impacts of Brexit on their business and the sector in which they operate. Brexit extends far beyond the potential imposition of customs and tariffs, and it is important to assess all factors.
Contingency plans need to be prepared under various scenarios; and Brexit changes the EU/UK trading relationship permanently and future strategy must be assessed in this context. This is particularly relevant for businesses that rely on the UK market for some or all of their supply chain.
Setting aside the uncertainty that comes with Brexit, the opportunities for businesses in Ireland are becoming clearer. Ireland is a fully committed member of the EU and the Eurozone, and businesses that operate here retain all the benefits that come with our membership of both. Ireland remains an attractive place to do business and the IDA, in particular, has been very active in promoting Ireland with its flexible and innovative workforce.
Our membership of the EU and our English-speaking workforce will continue to be important factors in attracting foreign direct investment post-Brexit. Indeed, we have already seen a number of financial services companies announce jobs in Ireland as a direct result of Brexit. Other sectors such as IT, life sciences and higher education
are examples of sectors that could also gain from Brexit.
As a result of Brexit, businesses must carry out strategic reviews if they are to become more competitive. Historically, Irish businesses have tended to look to the UK in the first instance and in many cases had no plans to look beyond. There have been valid reasons for this, including culture and language. Irish businesses will continue to trade with the UK and may find the option of establishing a presence in the UK attractive. This can be done by establishing a base in the UK, acquiring an established business or entering into a strategic alliance or joint venture with a UK company.
Brexit has challenged – and will continue to challenge – traditional thinking and will become a catalyst in opening up new markets. In this context, business owners should remember that for every Irish company concerned about Brexit’s impact on future trading with the UK, there must be a number of UK companies concerned with the impact on future trading with the EU. This presents opportunities for Irish business. Indeed, Irish businesses are in a unique position due to Ireland’s political alignment with the EU and economic alignment with – and proximity to – the UK, to maintain and enhance trading relationships with both jurisdictions.
As an EU member, Ireland will benefit from any future trade deals negotiated by the EU. President Junker, in his recent address to the Joint Houses of the Oireachtas, said: “The reality is that there is no arrangement outside the European Union which is as good as membership” and Irish businesses must capitalise on the benefits that EU membership brings.
Irish businesses have an opportunity to become amongst the most competitive in Europe. Technology, resilience and innovation are core traits that will enable Irish businesses to grow. With 29 March 2019 looming, it is important for Irish businesses to seize the moment.
How can we help?
We have been offering tailored customs support for businesses since the possibility of Brexit occurring in 2016.
We have partnered with our Customs clearance experts Easy Customs Ltd (www.easycustoms.ie) to offer a one stop offering in the areas such as:
- Help to unlock opportunities
- Customs requirement
- Classification of goods
- Vat
- Currency
- Certificates required
- Cross Border registrations
