Overcoming European Market Barriers: A Guide For UK Companies

The European market has long been a critical destination for UK businesses seeking growth and expansion. However, the UK's exit from the European Union (Brexit) has significantly altered the business landscape, introducing new challenges for companies looking to maintain or establish operations in Europe. Despite these hurdles, strategic choices such as selecting the correct country for market entry can help UK businesses overcome obstacles and thrive.

Regulatory and Trade Barriers Post-Brexit

One of UK businesses' most immediate challenges is navigating the regulatory and trade barriers that have emerged since Brexit.

• Customs and tariffs: UK companies now face customs checks and potential tariffs when exporting goods to EU member states, increasing costs and lead times.
• Standards and compliance: Products and services must comply with EU regulations, which may differ from UK standards, requiring businesses to adapt.
• Data protection: The UK's departure from the EU's GDPR framework has necessitated adjustments in data handling practices to ensure compliance with European privacy laws.

Loss of Passporting Rights for Financial Services

UK financial service providers have lost their passporting rights, previously allowing them to operate across the EU without additional regulatory approvals.

• Market access restrictions: Financial institutions must now establish local entities in EU countries to maintain access to European markets.
• Increased compliance costs: Setting up and maintaining these entities involves significant regulatory and operational expenses.

Logistical and Supply Chain Disruptions

Brexit has also impacted supply chains, making logistics more complex and less predictable.

• Border delays: Increased border checks have led to delays in the movement of goods.
• Rising costs: Higher transportation and administrative expenses have become a burden for businesses relying on cross-border trade.

Hungary as a Strategic Option

To mitigate these challenges, UK businesses must select a European base offering strategic advantages. Hungary stands out as an attractive option for several reasons.

The low corporate tax rate

Hungary boasts the lowest corporate tax rate in Europe at just 9%, a flat rate that applies uniformly to all businesses.

• Tax efficiency: This favourable tax environment allows UK companies to reduce their tax burden and allocate more resources to growth and development.
• Financial predictability: The flat tax rate simplifies financial planning and compliance, offering a transparent and predictable business environment.

Infrastructure

Hungary's central European location provides excellent connectivity to Western and Eastern European markets.

• Logistical advantages: With a well-developed transportation network, Hungary offers efficient distribution routes across Europe.
• Skilled workforce: The country is home to a highly educated and skilled workforce, particularly in sectors such as manufacturing and technology.

Efficient company formation process

Hungary's company formation process is straightforward and efficient, allowing businesses to set up operations quickly.

• Ease of entry: Hungary's business-friendly regulations make it simple for UK companies to establish a legal presence.
• Supportive environment: The Hungarian government actively encourages foreign investment through incentives and support programs.

While Brexit has introduced significant challenges for UK businesses seeking to enter the European market, strategic decisions can help mitigate these issues. With its 9% corporate tax rate and business-friendly environment, Hungary presents a compelling option.

By considering company formation in Hungary, UK businesses can navigate post-Brexit challenges and position themselves for long-term success in the European market.

About the author: Eve Hook is a dedicated business writer who enjoys exploring industry trends and sharing practical business strategies.