Corporate Emigration To France And The EU After Brexit
In the run-up to the UK’s full departure from the European Union at the end of 2020, there was much speculation, and in the case of many businesses, fear that Brexit could pose an existential crisis for their operations. The problem was that prior to the signing of a trade deal with the EU, there was no way of knowing how businesses in the UK would be affected. Would there be tariffs, and if so, how much, and on which items? Would there be a deal with Brussels on financial services? Would professional qualifications which had been recognised in the EU no longer be accepted? And what customs administration and checks would now be required?
These were just some of the countless questions businesses were grappling with in the months leading up to 1st January 2021. To mitigate the uncertainty, many businesses made the decision to set up a presence in the EU, and some moved their entire business to the continent. And in the coming months and years, it is likely that more UK businesses, both new and existing, will make the decision to move to the EU, in part or whole. In this article, we will discuss the status of corporate immigration from the UK to France and the EU after Brexit and how intra-company transfer schemes can assist.
The Scale Of The Corporate Shift From The UK To France And The EU
At the end of January 2021, the governor of the Bank of France said he estimated that 2,500 jobs and “at least €170bn in assets” had transferred across the Channel to France due to Brexit. He also believed that around 50 businesses had made the move. The number of jobs and businesses moving to France is not enormous, but given that we have been in the throes of a global pandemic, this is likely to increase now that the true impact of Brexit is known.
In addition, if you consider the number of jobs and businesses moving across the whole of Europe, the scale of corporate emigration may end up being substantial. According to the Observer newspaper, as of January 2021, around 500 businesses had made enquiries about setting up branches, depots or warehouses in the Netherlands. Around 440 UK financial services firms have moved at least some of their operations to the EU, and 7,400 jobs in the sector have transferred. From a monetary perspective, accounting firm EY estimates that financial services firms have now transferred nearly £1.3 trillion in assets from the UK to the EU.
None of this should come as a surprise, however, given that even the Department for International Trade was advising businesses in the UK that the best way to reduce barriers was to relocate to the continent.
Will London Lose Its Status As The Top Financial Hub For Europe?
According to the accounting and consulting firm EY, the future of the UK financial services sector relies heavily on what is contained in the ‘Memorandum of Understanding on Financial Services’ between the UK and the EU. Omar Ali, EMEIA Financial Services Managing Partner for Client Services at EY, stated, “Financial Services Firms across Europe have a number of chapters still to write before they can close the book on Brexit.
After the major hurdle of standing up new EU hubs, the days of significant swathes of asset and job relocation announcements appear to have passed and will likely be replaced by the slower yet ongoing movement of people and assets to Europe for compliance purposes”. He went on to say, “UK and EU Firms are now awaiting the detail of the upcoming Memorandum of Understanding (MoU) on Financial Services and will shortly face into a new round of Brexit discussions on the framework that will ultimately define the future relationship”.
On 26th March, the government announced that technical negotiations on the MoU had been concluded. This is not the end of the matter, however, as the MoU only represents the start of the negotiation process. The plan is for both sides to meet to find agreement on equivalence and regulatory matters at least twice a year. While there is still a long way to go, the news that negotiations are underway has been received with some relief by the financial services sector.
It looks as though the scale of financial services emigration has not been as vast as first envisaged. Most transfers so far have been to enable financial services businesses to establish a hub in the EU to allow them to continue selling into the EU market. The outcome of the current equivalence talks will lay the foundations for the long-term impact on London and financial services firms in the UK. Some optimistic Treasury sources in the UK believe that it may even be possible to reach a point of ‘normalisation’ between the UK and EU.
Setting up an entity in the EU involves a whole range of activities, including finding premises, business, and tax registration, arranging warehousing and logistics, setting up IT systems, and recruiting staff. One option which businesses may consider is using intra-company transfer visas to enable UK staff to be seconded to an EU country, and vice versa. The UK and France, for example, both operate intra-company transfer visa schemes. These allow businesses with a presence in different countries to move staff where they are needed without necessarily recruiting new team members, for example, to provide training and set up new production lines and IT systems. If you need assistance with any aspect of global mobility and intra-company transfers between the UK and EU (and vice versa), speak to a UK immigration lawyer who will be able to assist you?
If your UK business is considering setting up an entity in the EU to reduce the new barriers to trade that have emerged since Brexit, you won’t be alone. Many businesses in most sectors have done this already or are in the process of doing so. Where possible, try to learn from businesses that have already made the move, this will allow you to make the transition as smooth and quick as possible.
From the perspective of your most valuable resource, your staff, consider speaking to an immigration Solicitor to discuss how you can use the various existing immigration routes between the EU and the UK to reduce your staffing costs and allow the free flow of skills and experience between your entities on both sides of the Channel.