Are you wondering how complicated it might be to deal with clients, or establish a business presence, for the first time outside of the UK? Is it the same as doing business in the UK? The simple answer: it is the same – but different!

This article provides an overview of key legal considerations for UK businesses venturing into non-UK jurisdictions. Doing business in non-UK locations can range from the simple situation of selling goods and services cross-border (without any presence in the other country) through the very complicated demands of setting up a fully-staffed legal subsidiary operating entirely in that country.

Compliance with Local Laws

It is imperative to comply with the local laws and regulations of the relevant country when doing business outside the UK. It is easy to fall into the trap of believing that if you operate ‘from’ a different country there is no need to consider the laws of the other country. It can get complicated to work out which laws apply to your particular activity not least because different countries take different approaches to deciding whether you are operating ‘in’ that country or not (and how this can tip you into dramatically different consequences). The extent of the advice you need will vary both according to the country in question and the specific circumstances.

It will therefore be necessary to select and consult suitable local legal experts who can provide invaluable insights into both the relevant laws as well as the custom and practices of that country. Very often this selection of local lawyers and the evaluation of their advice is done hand in hand with your English law advisors – as long as they are themselves experienced in solving the legal puzzles of working cross-border.

The right foreign lawyers will be expert at assisting ‘inward investment’ and be familiar with navigating local bureaucracy when it comes to licences, permits or regulatory matters. They should be able to cover all the key areas: the legal framework governing business structures, operations, employment laws, environmental regulations, and industry-specific requirements.

Tax Implications when doing business outside the UK

Cross-border business activities often entail complex tax implications. UK businesses must consider with tax advisors who specialize in international taxation the tax obligations in both the UK and the foreign jurisdiction. This includes understanding corporate tax rates, value-added tax (VAT) requirements, and any applicable double taxation treaties.

Intellectual Property Protection when doing business outside the UK

Protecting intellectual property (IP) becomes much more complex once you start to factor in operating outside of the UK. UK companies should assess the IP laws of the foreign jurisdiction and take the appropriate steps to secure their trademarks, patents, and copyrights in that jurisdiction. This may involve registering IP rights locally and understanding the enforcement mechanisms available in the host country. Proactive measures can safeguard valuable assets and prevent potential infringements.

Contract Enforcement

It is essential to take advice on drafting contracts so that they are compliant with local laws and as near as possible give you the legal power you would enjoy if you were suing a UK client in the English Courts for breach of contract.

Most UK businesses will default to continuing to have their supply contracts governed by English Law. This is usually the best first choice, but even if you have contracts governed by English Law, there are many more considerations to take into account when contracting with a non-UK entity. If you end up claiming against, say, a Dutch customer for a breach of contract and you win your case in an English Court, you then have the problem of convincing a Dutch judge that this contract should be enforced in The Netherlands. Each of these issues has to be reviewed jurisdiction by jurisdiction with competent local advisors.

International Trade Agreements

These agreements can impact tariffs, import/export regulations, and market access. UK businesses should be aware of any trade agreements between the UK and the foreign jurisdiction, as well as any regional trade blocs that may affect their operations. Staying informed about trade policies can help businesses capitalize on opportunities and mitigate risks.

Setting Up an Office or Branch

If you decide to establish a physical presence in a foreign jurisdiction this will require considerable planning and consideration of legal requirements. This includes choosing the appropriate business structure, such as a branch or subsidiary, and complying with registration and licensing requirements, rules and regulations relating to products and services, employment laws, insurance, taxation, property ownership and lease agreements, and local operational regulations.

Doing business outside the UK – a few final words

Expanding into a non-UK jurisdiction presents both opportunities and challenges for UK businesses. By understanding and addressing the legal considerations outlined above, businesses can navigate the complexities of cross-border activities and position themselves for success in the global marketplace. Engaging experienced legal and tax advisors is essential to ensure compliance and protect business interests in the international arena.