Since the Brexit referendum in June 2016, hundreds of Brexit companies from all over the world have relocated or established their offices inside the EU. They want to do business on the EU single market and avoid the uncertainty caused by Brexit. Of these, 218 chose the Netherlands. How many are British and how many stem from other parts of the world is not clear, but NFIA figures suggest that the interest shown by potential Brexit companies is still on the rise. British companies especially are approaching NFIA for advice and help. Michiel van Deursen of the NBCC is not surprised: "The Netherlands is an attractive option."
Dealing with the facts
Up until the last moment, it seemed like many British entrepreneurs did not believe it would really go ahead, but as the EU-UK Trade and Cooperation Agreement was announced on 24 December 2020, the message hit home: Brexit is permanent. The UK remains a third country to the EU and vice versa. This affects all companies that used to benefit from the EU single market and the free movement of goods. Brexit brings with it many changes, and a lot of British companies need time to get to know the new rules, as the Brexit trade agreement has only partly removed the difficulties that result from the UK leaving the single-market and the free movement of goods.
The two largest changes are the checks at the border. These cause delays and make it impossible for goods such as fresh produce and fruit to be delivered withing 24 hours. Also there are extra costs such as VAT, EU sales tax and additional handling fees from transporters to cover costs associated with extra customs checks, and paperwork that must be filled out. As Michiel van Deursen, Executive Director Projects & Services of the Netherlands-British Chamber of Commerce (NBCC) points out: “The new rules are how we do business with non-EU countries all over the world. Eventually, companies will learn to deal with this, get their affairs in order and then business can run smoothly and straightforward.”
Even so, knowing the rules will not alter the fact that businesses have to deal with extra procedures, administration and costs. For instance, for products that mostly consist of parts made outside the UK, suddenly normal export tariffs need to be paid.
Only now that Brexit has come into full effect do British companies realise the impact of Brexit on their business in the EU. Van Deursen: “Many SMEs in the UK find that trading goods with Europe is becoming too complicated and too expensive for them, and either have already made their move, or are still considering a move to the continent, where they have access to the single market.”
Van Deursen is not surprised. In his view, any company that used to profit from the free movement of goods and the single market will benefit from setting up shop in Europe: “There are only two flavours: free movement of goods, people, capital, services, as we have in the EU, or being a third country. As soon as you are in a third country, you will have to deal with the procedures at customs. Neither the UK or Europe can say, ‘let’s skip all that’. It is simply a mandatory administrative requirement.”
Moving the company to the European mainland would mean no more export tariffs and no more procedures at customs - unless products are exported to the UK.
According to figures of the NFIA (Netherlands Foreign Investment Agency), hundreds of Brexit companies have moved to the EU since the referendum in June 2016. Of these, 218 chose the Netherlands. Financial institutions were the first to move, as they need to meet the European financial passporting demands to offer their services in Europe.
Most companies, however, decided to wait and see how Brexit would affect them. After all, everything was business as usual until Christmas 2020. According to Michiel van Deursen, the majority of companies woke up late in 2020: “Suddenly, they started to realise that there really would be big changes, and that they were going to need help and assistance.” Currently, NFIA is in contact with over 550 Brexit companies. Many of these are British entrepreneurs, who are considering moving their business or starting a branch office in the Netherlands. And the move also takes place the other way around, says Van Deursen: companies from the continent starting an office or distribution facility in the UK. They see Brexit as an opportunity to become a local player there.
Why the Netherlands?
According to the NBCC, the Netherlands has quite a good reputation in the UK. Van Deursen: “For UK entrepreneurs, there are several advantages: the Netherlands is nearby, we have an excellent infrastructure, both digital and physical; highly educated professionals, IT is up to speed and the UK and the Netherlands are culturally similar.” Traditionally, both countries have had a good relationship. The Netherlands has always been the hub to transport British goods further into Europe. And the Netherlands offers a transparent and affordable way of setting up a company.
Quite a few British companies transferred (part of) their business to the Netherlands prior to December 2020. For eample, Candy Hero, a company that imports candy from the USA, and Pirates Grog Rum, importers of rum from Honduras. They both export to European countries. Since these products are not made in the UK and do not meet the rules of preferential origin, they would have had to start paying export tariffs. And in the city of Venlo, near the German border, Snag Tights, a webshop that sells tights, and Monstergroup, a catering company supplier, both found a new place to take care of European business. Germany is an important market for both of them, and now they can offer next-day-delivery.