The United Kingdom has until March 2019, to reach an agreement on Brexit. Under existing EU law, all 27 countries in the EU must consent to any agreement. What should US companies with subsidiaries in the UK and Northern Ireland need to be concerned about and what affirmative steps should these companies be currently evaluating if a deal is not reached by this deadline? Join other senior executives from a variety of industries, including healthcare, financial services, technology, manufacturing, higher education, and life sciences for this informative seminar. Our international panel of experts from RSM and Quarles & Brady will describe the current state of Brexit, an update on the timeline, and discuss issues businesses should start preparing for now, including tax, IP, data protection, and labor. We will also provide an update on current negotiations and review a case study. You do not want to miss this engaging discussion on the risk considerations that companies should be aware of and the effects on your businesses.

1. 2019 Brexit Implications for US Companies with
UK Subsidiaries: What You Need to Know Now
6|8|2018
Chicago, Illinois

2. Panelists
Nicole Bashor
Partner
Quarles & Brady LLP
312.715.5104
nicole.bashor@quarles.com
Matt Dollard
Director of International Client
Service and Ireland Country Desk
Leader
RSM US LLP
312.634.4488
matt.dollard@rsmus.com
Aidan Byrne
Lead Tax Partner
RSM Ireland
+353 (0) 1 4965388
abyrne@rsmireland.ie
Ed Hannon – Moderator
Partner and Chair of Chicago
Business Law Practice
Quarles & Brady LLP
312.715.5094
edward.hannon@quarles.com

3. What is Brexit?
• March 2017 – Article 50 was triggered. Formal two-year period for exit
negotiations begins
• April 2019 – United Kingdom to formally exit the EU (extension of this date
requires unanimous consent of EU members)

4. Where Are We Now?
• UK stated position is that it is leaving both the Single Market and the Customs
Union
• Both parties anticipate that the future relationship will be via a Trade Deal
that will limit access to the EU market for UK and vice versa
• UK commits to maintain equivalency on regulation but with the right to
diverge
• UK wants a “bold and creative agreement on services” which makes up to
75% of the UK’s economy

5. March 2018 Transition Agreement
(Not yet ratified by EU members)
• Transitional Period agreed in principle , but not yet a ‘done-deal’
• Objection from any 1 EU member could derail transition
• Irish border issue remains problematic for UK despite their signing of a back-stop position
only months ago
• UK has conceded on EU citizens rights and on fishery policy
• UK will be able to negotiate, sign and ratify its own trade deals during the transition period
which will become effective once they formally leave EU block
• During the transition period, UK will remain a party to existing EU trade agreements but
will have no voting rights

6. Soft Brexit and Northern Ireland
• In the March 2018 Transition Agreement, UK agreed to have Northern Ireland
effectively stay in the single market and the customs union in the absence of
another solution to avoid a hard border with the Republic of Ireland
• This could place Ireland as the sole member of 2 internal markets (EU and
UK), placing Ireland as the ‘Hong Kong’ of Europe
• DUP, Northern Ireland party will not agree to this and is currently holding the
balance of power in UK parliament
• In practice this is unlikely to happen – WTO challenges
• The consent of all EU members, including Ireland, is needed for any "soft
Brexit" solution

7. Where Are We Now?
• An EU summit was held and progress made within 27 members
• A joint negotiating stance has been agreed
• An offer of a 21-month transition period to help business to adapt after Brexit
but UK position on Irish border leading to comments from the EU that this
will not happen in the absence of a sensible solution to the border issue
• Agreement on the Irish border remains main sticking point, despite both sides
agreeing to 3 options
• EU and Ireland are comfortable with any of these but since negotiation the
UK has pulled back stating they will put the union of the United Kingdom first
• EU Commission has said “we are all Irish” when its come to the border issue

8. Where Are We Now?
• FDI into UK has dropped by 10% in 2017 while investment in EU rose by 14%
in that period
• `Tory party continue to wage war within—Johnston becoming increasingly
vocal and urged May to “get on with it” (23/5/18)
• Sturgeon to recommence debate on Scottish independence
• Northern Irish politicians looking for border poll
• Michel Barnier says EU does not need City of London (26/04/18)
• George Soros to launch bid for second Brexit referendum (29/05/18)
• EU dismisses UK “fantasy” Irish border solutions (24/05/18)

9. Brexit Timeline
MAR APR MAY JUN JUL AUG
SEP OCT NOV DEC
2017 2018 2019
29April
EU summit to
determine Brexit
guidelines
8June
UK general election
15June
Bank of England Monetary
Policy Committee
announcements
18June
Final round of French
parliamentary
election
3August
Bank of England Monetary
Policy Committee
announcements
14December
Bank of England Monetary
Policy Committee
announcements
March 2018
Italian general
election
April 2019
Britain to formally
exit the EU
following
ratification of Brexit by
all other member
states (provisional
date)
Q42019
Spanish
general
election
29March
Article 50
triggered.
Two-year
period forexit
negotiations
begins
7 May French
presidential elections
close
11 May Bank of England
Monetary Policy Committee
announcements
27 May G7 Summit: Sicily
7July
G20
Summit:
Hamburg
14September
Bank of England Monetary
Policy Committee
announcements
24September
German federal election to
elect members of the
Bundestag
Summer 2017 Great Repeal
Bill introduced to UK
parliament
2November
Bank of England Monetary
Policy Committee
announcements
Late 2018 - early 2019
The European Parliament and
the British Parliament vote to
approve or disapprove the final
deal
October 2018
Michel Barnier’s proposed
deadline to complete
negotiations
May/June2019
European
parliamentary
elections

10. Operational Issues If No Planning is Done

11. Consequences of Hard Brexit for UK Subsidiary
• Potential loss of access to EU directives which could give rise to withholding taxes on
payments made from the EU to the UK subsidiary
• Potential imposition of VAT on goods shipped into EU and WTO tariffs
• Potential delivery delays from border control and customs enforcement
• Currency management issues with the UK subsidiary using Sterling as its functional
currency and not the Euro
• Regulatory uncertainty – though UK adopted GDPR as of May 25th – post Brexit differing
interpretation of the GDPR law by EU and UK Courts may break regulatory equivalence
• In turn exports of data between UK and EU could be restricted
• Staffing issues between different countries post Brexit

12. Taxation Issues
• Issues to be aware of:
• Loss of access to the EU directives including the Parent Subsidiary Directive and the
Interest and Royalties Directive, which could give rise to withholding taxes (WHT)
• Review of corporate structure to ensure minimizing WHT taxes by reviewing Double Tax
Treaties and local exemptions available
• Beware of setting up structures which achieve, on paper, tax benefits but which do not
meet substance requirements
• Consider splitting of business into UK and non-UK for the EU market in advance of
Brexit to avoid any anti-avoidance measures that will be introduced to avoid a flight of
capital and to maintain a presence in both markets post-Brexit

13. Supply Chain Management (SCM)
• As part of any tax review a Supply Chain Management review should be
undertaken
• VAT will become a cash-flow cost once the UK leaves the Custom Union
• In the absence of a trade deal, WTO tariff rates will apply
• Businesses should seek to amend their SCM to avoid unnecessary border
crossings—look at where customers are based and seek to source supplier
contracts in those jurisdictions, i.e. the UK or the EU
• Build in additional costs and time delays as Customs checks kick-in, even if
there is a successful trade deal negotiated. This is particularly important for
companies selling goods with short shelf life

14. Regulatory Environment
• The EU has a common regulatory framework covering all industries
• Regulatory ‘passporting’ permits a regulated entity to register with a
regulator in one EU state and passport that authorization to other EU states
• Post Brexit – companies doing business in UK and EU may need a dual
approach – one authorization in EU and a separate authorization in EU
• This will impact businesses based in the UK supplying into the EU and vice
versa
• Whilst PM May has said they will maintain the high standards of the EU she
has also retained the right to diverge – potential for regulatory competition
• UK will not submit to the jurisdiction of the ECJ post Brexit

15. Intellectual Property
• The UK is currently part of the EU Patents and IP regime
• Post-Brexit this will most likely not be the case
• Care is required regarding registration of a businesses IP and thought should
be given to bifurcation of that IP into UK and Non-UK IP for use in the EU
• Many EU countries have attractive tax regimes with low tax rates for
exploitation of IP and it may be an opportune time to review this, whilst the
UK remains within the EU with the benefit of the EU’s tax directives

16. Intellectual Property
• Existing IP Registrations
• Trademarks and Registered Designs  Be Proactive
• What about establishing use for registered trademarks?
• Use in EU and UK?
• Patents – mostly unchanged!
• New IP Registrations
• Madrid Protocol
• Hague Agreement
• Patent Cooperation Treaty and European Patent Convention
• Unitary Patents (not yet!)

17. Intellectual Property
• IP Enforcement
• Unified Patent Court (UPC)?
• Current Watch Programs
• Patent Clearance?
• IP Agreements and Terminology
• Consent, License, Co-existence
• Field of Use/Territory

18. Intellectual Property
• Recommendations:
• Be proactive about reviewing current portfolio and agreements
• Consider how current IP rights will be sustained in both EU and UK
• Update filing strategy with respect to Hague, Madrid, PCT, or EPC
• Review enforcement strategy and consider pros/cons of various jurisdictions before
filing an infringement action
• Agreements (IP and otherwise) should be reviewed for inconsistent or unclear
language  new agreements should use updated terminology

19. Legal Contracts and T&C's
• Choice of laws to be considered.
• Google conducts the vast amount of its EU business on Irish paper – this is accepted
practice in EU.
• Post Brexit – UK will (most likely) not recognize European Court.
• From risk perspective better for companies doing business in EU and UK to adopt dual
approach
• For business within UK – roll those contracts on to UK paper
• For business within EU – roll those contracts on legal paper of an EU member state
• UK and Ireland only common law systems in Europe
• Very straightforward to adapt existing Irish or UK contracts to the law of the other

20. Data Privacy
• The EU has entered a new era on personal data with the introduction of the
GDPR regime (May 25)
• All businesses that trade in the EU or hold personal data on EU citizens, even
if that business is not established in the EU, will need to comply
• UK has adopted GDPR
• Business should plan ahead and adopt dual strategy
• Key to GDPR is data subject consenting to data being held – time factor

21. Currency and Debt Considerations
• Companies who have either a direct or indirect exposure to the UK market will need to be
conscious of currency/debt implications
• The pound has weakened by 15% against the Euro since the Brexit result
• Bear in mind this is higher than any WTO tariff rates which could arise in a No Deal
scenario
• Companies that have Euro debt but Sterling customers could find themselves in the worst
of both worlds
• Treasury management will need to become a key component of any business operating
across the UK border as this volatility is forecast to last for another 2/3 years as the effects
of Brexit take hold

22. People Issues
• One of the key drivers of the Leave vote was the EU’s Free Movement of People
• Once the UK leave this free movement will no longer exist and the current talent pool of
550 million people will shrink to 65 million people for UK businesses
• No doubt some type of deal will be done but any deal which does not stand on all fours
with the EU’s 4 Freedoms is likely to lead to restricted access for talent both ways
• This has already begun to effect FDI into the UK with a 13% decrease in investment into the
UK in 2016
• Post Brexit Ireland and the UK will continue to have a common travel and work area as part
of Common Travel Area (1929), which the EU has confirmed they will recognize

23. Potential Solutions
• Create dual headquarters in the UK and Ireland
• Bifurcate IP as required to operate in UK and EU
• Maintain UK customers on existing UK contracts based on sterling
• Role non UK customers on to Irish law contracts based on Euro
• Role employment of French and German staff to Irish company – preserve EU
assured employment rights
• Review regulatory authorizations and consider dual strategy
• Hold UK private data in UK and EU private data in Ireland

24. Case Study
• Datatech, Inc. is a Delaware corporation headquartered in Chicago
• In 2011, Datatech formed a UK subsidiary ("DT-UK") and currently has a facility outside of
London
• DT-UK has developed its own technology and is currently operating in the UK and the EU
• DT-UK has employees in the UK, France and Germany. The employees in France and
Germany work from a home office
• The UK and German employees prepare data analytics services for customers located
throughout the EU. The team in France provides technology support and development of
new technologies
• Datatech, Inc. is seeking advice on how to plan for Brexit

25. Case Study
• Why Ireland and not another EU country?
• What are the mechanics of the dual headquarters structure?
• Considerations from a US perspective

26. Panelists
Nicole Bashor
Partner
Quarles & Brady LLP
312.715.5104
nicole.bashor@quarles.com
Matt Dollard
Director of International Client
Service and Ireland Country Desk
Leader
RSM US LLP
312.634.4488
matt.dollard@rsmus.com
Aidan Byrne
Lead Tax Partner
RSM Ireland
+353 (0) 1 4965388
abyrne@rsmireland.ie
Ed Hannon – Moderator
Partner and Chair of Chicago
Business Law Practice
Quarles & Brady LLP
312.715.5094
edward.hannon@quarles.com

27. © 2018 Quarles & Brady LLP - This document provides information of a general nature. None of the information contained herein is intended as legal advice or opinion relative to specific matters, facts, situations or issues. Additional facts and information or future developments
may affect the subjects addressed in this document. You should consult with a lawyer about your particular circumstances before acting on any of this information because it may not be applicable to you or your situation.
Thank You