Western Europe

The Disadvantages of
Setting Up a Non-Resident Entity in the UK

By June 5, 2019 June 6th, 2019 No Comments
The Disadvantages of Setting Up a Non-Resident Entity in the UK

More than two months after the UK’s original leave date, Brexit’s final impact is still shrouded in uncertainty. In February, however, GDP figures were released that were anything but obscured; reports at the time showed not one but four quarters of declining business investment that, coupled with the lowest annual growth rate since 2009, saw 2018 pass by on an incredibly dour note. Businesses in nearly every industry are being impacted. Budget airline Ryanair, for example, saw profits slide tremendously due to the one-two punch of Brexit uncertainty and lower fares across the board. That particular company recently reported its lowest profits in four years—a trend that unfortunately shows no signs of slowing anytime soon, and is reflected country-wide.

This trend makes one thing very clear: now more than ever, there are a number of key disadvantages that come along with setting up a non-resident entity in the UK.

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Setting Up a Non-Resident Entity in the UK

Ultimately, the two major disadvantages of setting up a non-resident entity in the UK can be summed up in just two words: time and money. Of course, this was certainly true before the Brexit vote, but the situation has since become more glaring. Consider the fact that, according to one study, not only will organizations likely have to spend between $15,000 and $20,000 just to begin the process of setting up a non-resident entity, but will also likely have to pay about $40,000 per year just to maintain it.

Likewise, this process itself is nothing if not slow; the setup time usually takes between three to four months, give or take. When considering the Brexit timeline, three to four months can spell drastic economic and political shifts. The type of uncertainty Brexit brings, coupled with the financial costs and time of setting up and maintaining an entity, makes setting up a non-resident entity in the UK more difficult than in previous years.

An Agile Alternative: Partnering with an International Professional Employer Organization (PEO)

One viable, agile option for companies wanting to expand into the UK is partnering with an International Professional Employer Organization (PEO). As opposed to the disadvantages outlined above, International PEO brings with it a number of benefits.

First, working with an International PEO like Velocity Global comes with no long-term commitments, allowing businesses to not only test new markets, but to also exit these markets at any time—with no lingering costs or long-term commitment. This means that if the situation with Brexit worsens before it gets better (and it might), companies have much more flexibility to quickly plan a strategic exit than would be possible with a traditional non-resident entity.

Not only does working with an International PEO allow for quick market entry and exit, but it’s also a viable way to reduce costs. Companies can easily reduce global expansion costs by up to 60% when compared to setting up and maintaining a non-resident entity in the UK—or in virtually any country across the globe.

Establish Your UK Presence with an Experienced Expansion Partner.

Even with uncertainty and no shortage of speculation of how Brexit play out, working with an experienced expansion partner can help businesses navigate the complexities of establishing a presence in the UK.

Velocity Global has made global expansion possible for hundreds of companies, with the UK being one of the most popular global expansion destinations. If your organization is considering expanding operations into the UK, reach out to us today to learn how our International PEO solution can have you up and running in the UK in as few as 48 hours—with no long-term commitment.

Ready to get started? Let’s talk.