Will US companies use UK as stepping stone to do business in the EU?

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American companies are setting up subsidiaries in the UK to use as a stepping stone into the EU and Asia-Pacific. Simon Gleeson, a partner at tax and advisory firm, Blick Rothenberg, shared his views with Business Leader on the future of the ‘special relationship’ and its influence on European business.

In January we saw increased interest from companies from the United States who want to use the UK as a catalyst for future expansion and are setting up their main subsidiaries in this country.

As US companies have completed filing year-end tax returns, their attention has turned to the need to set up a second subsidiary in mainland Europe to support their regional expansion plans into the EU and elsewhere in mainland Europe.

For those physically shipping good, supply-chain delays layered with increased scrutiny and reporting requirements has made having an EU presence a compelling requirement, mid-to-long term when selling to European markets.

This is primarily being driven by a wish to maintain market share and momentum by putting in place an entity to de-risk potential challenges, with tariffs and ultimately avoid further costs to the end customer.

For those companies operating in digital and tech, their concerns are less associated with product and supply chain, than with the ability to service clients in person, especially important in areas that require strong subject matter expertise – consulting and engineering.

The number of US companies who will open subsidiaries in the UK will grow further in coming months, as more and more realise that the UK is a great jumping off ground. We speak the same language, know how American business works, and what their aspirations are. We can help them with the complexities of setting up in the EU which we have had to accomplish for many of our UK clients due to Brexit.

Further clarity is needed around double tax treaties and which of the EU member countries will choose to opt out, including France. This could become costly to companies whose business and market strategy is dependent on the movement and short-term assignments of international business travellers.

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