Brexit and implications for UK enterprises

The greatest advantage of the European Union is the economical and uninterrupted access to the EU single market. There is a range of benefits that can be mentioned, such as cash flow savings from the absence of VAT charges between businesses for intra-EU provision of services, ‘passporting’ of the licenses financial institutions have from one EU member to another, and absence of custom duties for trading companies.

Following the Brexit vote, there is a great uncertainty about the future ability of UK enterprises accessing the EU market and the related terms. The experience of the recent difficulties in concluding the Comprehensive Economic and Trade Agreement (CETA) with Canada and the ongoing for years talks for the Transatlantic Trade and Investment Partnership (TTIP) with the United States indicate that the commencement and conclusion of the EU-UK trade agreement will not be an easy ride. Lastly, there is no guarantee for the future status of UK enterprises in relation to the EU and whether they will be considered ‘third country’ entities and not be able to seamlessly enjoy the benefits they currently do.

Why Cyprus can be the solution for UK enterprises and businesses

Cyprus and UK traditionally have enhanced business and trading relationships for a number of reasons. Cyprus maintains the most competitive taxation system within the EU, with a corporate tax rate of 12,5% and a number of incentives, such as exemption of dividend income and gain from disposal of securities from taxable profits. In addition, since Cyprus has been a British colony till the 1960s, its legal system is based on Common Law, its judicial system is a replica of the British one and English is one of the 3 official languages of the Republic. As a result, a large number of UK financial institutions historically took advantage of the ability EU gives for passporting their licenses to Cyprus, whether foreign exchange brokers, MiFID investment firms and businesses covered by AIFMD (alternative investment funds and managers). In addition, a number of UK entities list their corporate bonds in the Cyprus Stock Exchange, which comes with a much lower costs than equivalent exchanges in Europe. Lastly, international corporations originating from UK have been using Cyprus companies in their structures for optimizing their taxation liabilities.

With the uncertainty that accompanies Brexit, Cyprus has all the necessary ingredients for being the EU base of UK enterprises. It is advisable to act proactively and be prepared for any possible outcome of the EU-UK trade agreement negotiations rather than wait and find themselves in unchartered territories.

Services provided by REANDA Cyprus Limited

REANDA Cyprus Limited has extensive experience in international structuring and EU license passporting. It is also nominated advisor for listings in the Emerging Companies Market of the Cyprus Stock Exchange.

For any in depth queries and/or further discussions, please contact us at This email address is being protected from spambots. You need JavaScript enabled to view it. and one of our specialists will respond accordingly.