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14 March 2017 - Merle Burghart

Last orders before closing time: Start your own business now before Brexit kicks in


Business start-ups facing the prospect of a UK outside the EEA

The United Kingdom completely outside the EU? Hard to imagine, but currently a distinct possibility.

On 23 June 2016, 51.9 per cent of the British electorate voted to leave the European Union. As yet, no one knows what exactly this ‘Brexit’ is going to look like. But one thing is certain: any ex-pat Brits who have been thinking about setting up their own business should act now. Because once the UK starts to be treated as a non-EU country, start-ups by British citizens in Germany would face bureaucratic hurdles.

We explain why now is the ideal time for British people to take the leap and become their own boss.

Manuel Kühn from Bremeninvest’s welcome service
Manuel Kühn from Bremeninvest’s welcome service knows the consequences awaiting Brits in Bremen should the UK become a non-EU country © WFB/Merle Burghart

Freedom to trade

Any British citizens contemplating whether to register a business in Bremen or anywhere else in Germany should take heed: Their best option is to register the business now and make best use of their remaining time as EU citizens.

Why? Because EU citizens enjoy certain freedoms. One of them is the freedom to trade. This means that any citizen from any country within the Union is free to register and operate a business in any member country. You can register through Bremen’s Einheitlicher Ansprechpartner (single point of contact) at the Unternehmensservice Bremen business support agency. Then the tax office issues you with a tax reference number, and you’re all set.

But what happens once the United Kingdom is no longer a member of the EU? We don’t yet know what the relationship between the UK and the EU will be once it leaves. One possibility is that the United Kingdom could become a non-EEA country. That is a country which is not part of the European Economic Area, or the European Union itself. People from outside the EEA are also able to run a business in EU countries. But in order to do so they have to overcome considerable bureaucratic obstacles.

Sketchnote: Die Überwindung des Bürokratie-Berges
To set up business in an EU country, people from outside the EEA may need to overcome considerable bureaucratic obstacles © Bremeninvest/Merle Burghart

The United Kingdom outside the EEA

What does someone from outside the EEA have to do to register a business within the European Union, as opposed to an EU citizen? Manuel Kühn from Bremeninvest’s welcome service is the expert. Every day he helps people from around the world to start their own business in Bremen: “To set up and run your own company you need a visa and a residence permit. But getting those can involve quite a bit of work.”

Were the United Kingdom to start being treated as a non-EEA country, British citizens too would require a specific residence permit for the purpose of conducting business.

Finally self-employed

So why not seize the opportunity to make your dream of becoming your own boss come true while it is still simple and straightforward? “Opting for self-employment would offer British citizens the opportunity of remaining in the EU. But of course the first consideration when registering a business should always be whether it would be viable. Setting up a company that doesn’t work is rarely a good idea. The main focus should be on making the enterprise a success,” Kühn emphasises.

Once non-EU citizens have paid pension contributions in Germany for five years they become eligible to apply for a settlement permit, allowing them to stay in the EU indefinitely. “For the self-employed there is a quicker way. Five years is normally the rule. But for self-employed people this can be reduced to three years, if the economic success of the enterprise can be verified.”

Finally self-employed
Finally self-employed! © Bremeninvest/Merle Burghart

Getting the timing right

But what happens if British citizens register their business in 2017 and then the UK leaves the EU two years later? Does that mean all is lost?

“Anyone who decides to set up a business now can do it without having to face great bureaucratic hurdles. Then you can use the remaining time until Brexit to prove yourself. If you have already been running your business for two years when the United Kingdom leaves the EU that will be a lot more impressive than a start-up that has only been going for a few weeks,” predicts Kühn. “The aim will always be to set up a business with a future. And if you can show two years of sound operation, no one is seriously going to want to come between a thriving business and its proprietor. I cannot image that someone would suddenly be deported after two years of success.”

The business plan - additional effort for non-EEA citizens

If citizens of a non-EEA country decide to register a business in Bremen, they face quite a struggle with bureaucracy. This begins with an application to the relevant embassy or consulate, where they have to submit various documents, including a business plan. Applicants must make a convincing case for the viability of the business they intend to set up.

What does such a business plan consist of? You need to outline your business concept. It also requires projected earnings, an investment plan, a capital requirement plan and a liquidity plan. 

“Your business plan must be completely convincing in terms of why you are the person to see it through. Based on your plan, the assessors must be able to satisfy themselves that the proposal makes sense,” explains Kühn.

Once that is done, the foreign representative office sends the documentation to the relevant Municipal Immigration and Registration Authority in Germany. They in turn obtain expert advice, normally from their chamber of commerce. The chamber of commerce produces an expert opinion, which assesses the economic sustainability of the proposed business, among other things. 

“The whole process could easily take a few months. That is something that needs to be considered when planning the time required,” says Kühn.

Meeting the needs of the region

One important aspect in favour of launching a start-up before Brexit takes effect is the consideration given to overriding economic interests for applications from non-EEA citizens. The expert opinion also assesses whether the business meets a particular regional need. This means that there is a particular onus on non-EU citizens to find a special niche.

For example: As a non-EU citizen wanting to set up a snack bar on Bremen’s Ostertorsteinweg you can expect to be turned down, because that small area already has a high density of snack bars. However, that does not matter to EU citizens, who do not need to find a special niche where they can add value.

Dear Brits – it’s last orders for start-ups! If you’ve always had an idea for your own business, now is the time to take the plunge. Here in Bremen, we like you and the added value you bring. We’re happy for you to come, and to stay!

For further information contact Manuel Kühn, project manager welcome service,

+49 (0)421 163 399-477, manuel.kuehn@wfb-bremen.de

How to start your own business with our welcome service? Find out!

Click here for more information on our funding and support for businesses in Bremen.

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