Going Global: Key Legal Considerations for UK Businesses Expanding Internationally

24 Sep

Many of our clients expand from the UK internationally, and our Business Law team have some tips for avoiding the all-too-common pitfalls of businesses going global.

Expanding internationally offers UK businesses new markets and growth opportunities, but it also presents legal challenges that can undermine success if not properly managed. For business owners looking to grow beyond the UK in 2024, understanding the legal framework of new markets is crucial. Here’s what business owners should keep in mind to ensure a smooth global expansion.

1. Choosing the Right Legal Structure

When expanding abroad, selecting the right legal structure—whether a subsidiary, branch, or joint venture—has critical legal implications. A subsidiary, for example, provides limited liability but comes with more complex local governance requirements. In contrast, a branch is easier to set up but could expose the UK parent company to greater risks. Post-Brexit, UK companies must be especially cautious when setting up in the EU, as they no longer benefit from harmonised EU business laws.

2. Employment Law and Tax Compliance

Each country has its own employment laws, which differ significantly from those in the UK. For instance, wage standards, working hours, and benefits can vary, and failure to comply with local laws can lead to fines or litigation. Equally important is tax compliance. While the UK has double tax treaties to avoid paying taxes twice on the same income, businesses still need to register for corporate taxes or VAT in new markets. Non-compliance can attract penalties and damage a business’s reputation.

3. Intellectual Property Protection

As UK businesses expand, protecting intellectual property (IP) internationally is vital. A UK-registered trade mark or patent won’t automatically protect you abroad. Companies need to apply for IP protection in each jurisdiction they operate in. The UK’s exit from the EU means trademarks and patents no longer extend across Europe, requiring new applications through the European Union Intellectual Property Office (EUIPO). Securing international protection can safeguard your innovations from potential infringement.

4. Cross-Border Contracts

Cross-border business brings varying commercial laws into play. International contracts often fall under foreign legal systems, so it’s essential to define which country’s law governs the contract and which jurisdiction handles disputes. UK businesses should carefully draft contracts to account for differences in liability and ensure compliance with international trade laws, particularly post-Brexit when navigating customs and tariffs has become more complex.

5. Data Protection Compliance

Expanding into markets like the EU or the US means adhering to different data protection regulations. While the UK’s data protection regime is based on GDPR, markets like the US operate under a patchwork of state and federal laws, such as the California Consumer Privacy Act (CCPA). Businesses must ensure compliance with both UK and local data laws to avoid hefty fines and reputational damage.

6. Trade Sanctions and Export Controls

Finally, compliance with UK and international trade sanctions is critical for any business expanding globally. The UK’s Export Control Act 2002 restricts the export of specific goods, and businesses must also align with EU and US sanctions. Breaching these controls can result in severe penalties and restrictions on future trade.

Therefore, by staying ahead of these legal considerations—employment law, tax compliance, IP protection, and trade regulations—UK businesses can confidently navigate international expansion and position themselves for long-term success.

For more information, please reach out to our Corporate Partner, Richard Hyman at Richard.Hyman@asserson.co.uk