This guide written by Chartered Accountants Ireland provides a good summary of the legal and tax context of Brexit as it affects Ireland.
It reviews some of the possible models for the future UK-EU relationship and how those might impact Ireland. Reading it helps to isolate some threats and opportunities that may appear.
We summarise some of the guidance below and there’s a link to the guide at the end of the article.
At the moment trade between the UK and EU States can be done with no import and export duties applying. It’s entirely possible that an agreement will be made that allows this to continue. But if no agreement is made then customs tariffs will become an issue.
The position with exports is uncertain as that will depend entirely on what the UK decides to do. The probability is that it will make Irish businesses less competitive to UK consumers.
The import side is a little more certain in that you can check the EU import tariffs that currently apply to countries that are outside the EU. Since this would make imports more expensive to you then the guide suggests taking the opportunity to source other suppliers in the EU where the imports will be duty-free.
It may of course take time to do this, but time spent now researching and cultivating relationships could be time well spent.
It’s completely unknown as to what effect EU laws and directives will have on UK law post-Brexit. The guide concludes that if a UK-based business wants to keep the protection it gets from EU law and the EU Court of Justice then it would need to relocate.
We can see that being English-speaking, Ireland is likely to be a favoured destination for those businesses. They will need local suppliers, premises to occupy and people to employ, and this means opportunities. On the other hand it could also bring increased competition to businesses already here.
The guide highlights the financial services, airline and telecommunications industries as coming under particular pressure and so businesses in these areas may look to relocate.
At the moment there is completely free trade and movement between the North and South of Ireland. But the guide predicts that this will change post-Brexit as there would be a need for border controls to manage the import and export duties.
It’s not known what the UK would do with VAT. The guide highlights that it will need to decide whether to allow foreign countries to reclaim UK VAT. If it doesn’t allow this then purchasing from the UK will become more expensive.
Import VAT would also be payable upfront and this will have a cashflow impact.
The guide explains that the UK will no longer be under EU State Aid rules and so could offer incentives to UK-based businesses.
In our view this could make Irish businesses less competitive in the UK, or may mean opportunities will become available for setting up UK-based subsidiaries.
Read the Guide
Click here to access the guide.