The European Union (EU) remains the leading business partner for Welsh exporters, and understanding how to navigate its legal, financial and structural requirements is key to success. Here’s what businesses in Wales need to know…

Why trade with the European Union?

The EU is a primary export market for Welsh and UK goods and services, accounting for 41% of the UK’s exports (£358bn) in 2024. The EU consists of 27 countries across Europe, operating as a single market which allows the free movement of goods, services and people between those countries.

Following Brexit, the UK’s trading relationship with the EU changed. The UK is now outside of the single market and customs union as part of the trade and cooperation agreement agreed between the UK and the EU. The agreement ensured that there are no tariffs or quotas on products traded between the UK and the bloc’s member states provided that the goods meet the rules of origin, but barriers to trade exist such as increased customs and regulatory requirements.

The Labour government set out its approach to bilateral relations earlier this year, improving dialogue and trade arrangements to support growth and investment.

How can you trade confidently and compliantly with the EU?

In addition to sustainability regulations for exporters and the supply chain such as the EU Deforestation Regulation and Carbon Border Adjustment Mechanism, there are also financial considerations that businesses should be aware of.

As the EU looks to modernise its VAT procedures for cross-border trade, exporters need to keep track of the changes set to come into effect over the next four years. The proposed processes take a step to reduce administrative burden and embrace digital efficiencies, such as changes to place of supply, single VAT registration, domestic reverse charges, e-invoicing and digital reporting requirements.

How can you choose the correct legal structure for your EU operations?

Some businesses may consider setting up a base through a subsidiary or branch office in one or more EU countries or explore appointing a commercial agent and franchising opportunities to assist with trade.

Choosing the correct legal structure for EU operations will depend on a number of factors including initial costs, liabilities, business practices and culture, payment terms, local taxation and regulations, and employment requirements.

At Chambers Wales South East, South West and Mid, our team keep up to date with the latest developments, trade agreements and opportunities to support businesses in Wales who export and import. Earlier this year, we partnered with Spain-based Top Brands Consulting, which specialises in internationalisation and foreign direct investment, to provide landing services into the European Union for Chamber members. This support helps members who currently trade within the EU and those who plan to do so in the future.