Your money-making expert. Financial journalist, TV and radio personality.
The UK’s vote to withdraw from the EU in 2016 was a fractious and bitter-fought one, which had dire consequences not only for the trajectory of the UK’s economy but also for the state of its body politic. Despite some of the more positive economic arguments for withdrawal, the UK’s recent continued economic struggles illustrate the difficulty brought about by a new era unmoored from the protections and perks of EU membership.
Whatever the individual feelings regarding the UK’s formal withdrawal, it has resulted in tangible and comprehensive change for businesses still attempting to operate and trade with European countries – particularly those in the EEA. But what is the EEA, and what to businesses need to know about the UK’s new relationship to it?
The European Economic Area (EEA for short) is, in essence, a trading zone. It describes the EU member states, with the inclusion of three states that partially constitute the European Free Trade Association (EFTA): Liechtenstein, Norway and Iceland.
The EEA operates as an extension of the European Union’s Single Market, which itself enables the free trade of goods, capital, and crucially, service, between countries within it – as well as the free movement of people. The EEA remains distinct from the European Union, though, in that non-EU members are not expected to contribute in the same way to EU funding and policy. It also allows non-EU member countries devolved control over agriculture and fisheries.
While the UK-EU Withdrawal Agreement formally concluded at the start of 2020, changes to trade over the UK border were still underway. As of January 2021, the key changes occurred that ended the UK’s operation under EEA regulation; changes occurred in relation to trade tariffs and VAT, as well as the legal frameworks behind operating internationally.
There is no one-size-fits-all approach to conducting business across the UK border now, with different countries requiring different authorisations and stipulations for compliance. As such, it is crucial that businesses consult with experts in international law to ensure they are fully compliant and able to continue.
The conclusion of the UK-EU Trade and Cooperation Agreement is the key driver behind changes to legislative requirements for UK businesses that operate in EU or EEA territories. Non-national directors of UK businesses may have new requirements regarding the equity they hold, while UK companies with an EEA headquarters will need to comply with business reporting to Companies House in a manner equivalent to other overseas businesses.
Ultimately, the end of the UK’s EEA membership means that any trade conducted with EEA-membered nations must be done according to their individual laws and terms – requiring a potentially different approach from country to country. Trade reservations are ‘baked’ into the new trade agreement, allowing individual countries to create their own laws restricting the sale of certain goods.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
Get weekly ideas, deals & freebies
New data capture form 2023. This is for the popup form to avoid duplicate IDs.
"*" indicates required fields