Brexit poses challenge for UK firms to expand in the EU

28 July 2016

In practice whilst direct taxes tend to be a matter the member states themselves there are a number of EU directives and legislation which is primarily aimed at removing obstacles for businesses operating within the EU.

For example groups can currently take advantage of EU provisions in order to undertake reorganisations or mergers of their European operations on a tax neutral basis. While these rules are incorporated into UK tax law and may continue to apply to reorganisations undertaken by UK companies, is likely that in the local rules in the remaining 27 EU member states would no longer extend to include the UK.

Alternatively as the UK government would no longer need to adhere to the principle of  freedom of establishment within the EU, this could result in the UK implementing  measures to attract foreign investment whilst at the same time making it more difficult to transfer business from the UK (via exit charges) to other EU states.

So for businesses that are considering acquiring an EU business, it could be prudent to move more quickly before Brexit negotiations are completed.

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