The main areas that retail businesses should be aware of as a result of Brexit are potential changes to the organisational structure of their businesses and the associated regulatory obligations.
Freedom of establishment to operate and trade in the EU:
- If a retail-related business provides its services via a branch or establishment in EU countries, that business should check if local law imposes requirements post Brexit. In particular, before 31 December 2020 there was commentary that loss of the principle of freedom of establishment could affect UK businesses. In particular, the potential loss of recognition of limited liability status for UK-incorporated businesses with their central administration or principal place of business or with branches in remaining EU Member States that operate the "real seat" principle of incorporation. Businesses should ask local lawyers to confirm the position.
Overseas business with UK branch:
- Those operating retail-related businesses that are incorporated in an EU country but operate a branch in the UK, may have already noted that there are now extra overseas company filing and disclosure requirements. Businesses had until 31 March 2021 to complete this initial process.
Accounting requirement changes for EU and UK companies:
- Certain exemptions in the Companies Act 2006 relating to the preparation of individual accounts no longer extend to UK companies with parents or subsidiaries incorporated in the EU. If a group structure has a UK parent company with a subsidiary in the EU, the business needs to check reporting requirements in the country where that business subsidiary is based. UK businesses with a branch operating in the EU have become third country businesses and are now required to comply with accounting and reporting requirements in the Member State in which they operate.