BREXIT – Taxing for UK business?

There are still so many questions surrounding the EU Referendum for business owners.

It’s difficult to say exactly what will happen to UK businesses if UK citizens vote to leave the EU. Would we adopt the Norwegian model and remain in the European Economic Area, join the Swiss model of the European Free Trade association or rip it up and start again?

I can confidently say whether we vote to remain or leave Europe on 23 of June we’ll all still be paying taxes.

Specialising in tax it’s easier for me to look at the cold hard facts rather than speculate about the future. Today, I’m looking at current tax system and what would be affected by a vote to leave.

What taxes will change after a BREXIT?


This is a European tax that brings in around 21% of revenue, each year, and no government is going to walk away from the revenue it raises.

What may well change is the type of goods and services that fall in or out of the general VAT rules and the rate applied.

HMRC has previously challenged the rules attached to VAT but the European Court of Justice has frequently slapped them down, without the EU angle HMRC would have acted very differently.

One thing we can be sure of is that a ‘sales tax’ will still exist if BREXIT happens but without the checks and balances of the European Court of Justice.

Many UK taxes have been affected by EU law. As a member state the UK Government controls direct taxation but other taxes are woven into the fabric of EU legislation and UK complies with a number of EU directives.

EU directives

Parent-Subsidiary Directive

The Parent-Subsidiary Directive was set up to help companies with parent and subsidiary companies based in different EU member states by preventing the parent being taxed again on the subsidiary’s profits and withholding taxes being charged on intra group dividends.

For example, if BMW, the parent company in Germany receives a distribution of profits (dividend) from the subsidiary BMW plant in Swindon the parent receives the dividend without UK withholding tax and is not taxed either on the Swindon plant’s profits.

Interest & Royalties Directive

This directive was set up to protect cross-border issues by eliminating tax obstacles on royalty and interest payments between companies in a group in different EU member states.

Merger directive

The Merger Directive was set up to allow companies in different EU member states to defer the tax charged on the reorganisation, merger and/or transfer of assets and liabilities from one or more companies.

What taxes won’t change following a BREXIT?

This is more difficult to predict but Property related taxes will remain much the same if UK remains in or leaves EU.

Before you vote consider the impact of EU legislation on:

  • Products, goods and services you sell
  • Customers (UK, Europe, Rest of W orld),
  • Employees (UK, European or Rest of World)
  • Suppliers – would you have to negotiate new terms
  • Freedom of movement
  • Impact of current directives on your businessEvery business is unique and one directive that benefits a company can hinder another. At Murrison & Wilson we’re keen to know what you think and hear how the EU referendum is impacting your business. How would Brexit affect your business?

#taxes #UK #Euref #EUreferendum #accounting

Join the debate on Twitter @brucewilsontax


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