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The Brexit Column: Knowing me, knowing EU

The Brexit Column: Knowing me, knowing EU

Businesses will need to be far more expert about the inner workings of the EU after Brexit, says KPMG tax partner Tim Sarson.

Tim Sarson

Partner and Brexit Tax & Location Lead

KPMG in the UK


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Magnifying glass examining Euro note

The vote on the Great Repeal Bill in the early hours of Tuesday took us one step closer to Brexit. With the clock moving fast, businesses are starting to focus in earnest on what they need to do to prepare for its impact. But have you also thought about how much better you’ll need to know the EU once the UK has left the club? 

Of course, some things won’t change: France will remain 21 miles off the Kent coast, Ireland will still be across a field or stream from its northern neighbour and, given our proximity, trade between the UK and the EU will continue in huge volume. 

An unfamiliar world

Yet after Brexit, the rules by which that trade is carried out are likely to change materially in many cases. For UK companies – used to treating the rest of Europe as an extension of their domestic market (with one set of rules and regulations covering everything) – the world could feel very unfamiliar.

If you do business with the EU, you may eventually have to know your way around two regulatory frameworks, two VAT systems and, in some cases, two immigration systems. If you want to influence EU policy you’ll have to do more yourselves, and not only with the European Commission, but also with the myriad official bodies that regulate business activity across the member states, and the officials and inspectors whose signature can mean the difference between being able to do business and not. 

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Likewise, some businesses and trade bodies might already lobby the Commission to shape policy, but also rely on the UK Government and MEPs to represent UK business interests. After Brexit, the UK Government won’t have that automatic seat in meetings in the Commission and Council to represent you. Navigating the EU’s structures and understanding its policy-making process needs to move up your agenda from today. Anecdotal evidence suggests British businesses are already less present in Commission buildings than their Dutch, Belgian, German or French counterparts.

British companies trading in Russia, India, China or Latin America already know what’s required. Market entry is complex and can take months and millions of pounds to get to grips with local regulations, work through officialdom and establish a profitable presence. For every new market there’s a new customs border to navigate, different visa rules and different product regulations. It’s just an accepted part of the process to doing business, and in 18 months’ time it could be the case with the European Union too. The mind-set that ‘EU stuff just happens’ no longer holds.

So what now? Today, few can claim an in-depth understanding of the EU and its institutions.  Even for those of us specialising in Brexit, the last year has been a steep learning curve. The earlier you get to grips with the nuts and bolts of how the EU and its institutions work – and where your business, products and services fit in – the stronger your competitive advantage.

It is perhaps one of the paradoxes of Brexit that the further we move away from the EU as a third country, the more we must get to know it.

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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK. You can register for the email subscription list of this column and expert views from our Brexit leaders.

© 2020 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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