European banks need to consider the tax implications of relocating in the face of Brexit.
When the results of the EU Referendum were announced in June, passporting quickly became central to conversations speculating the future of financial services in the UK. This has led to an ongoing debate on the potential need to relocate in order to maintain passporting rights.
In this article, KPMG’s Antony Rush and Victoria Heard share the tax considerations banks should consider if they decide to transfer operations to mainland Europe - and particular locations in the EU27.
The tax implications of relocating operations can broadly be summed up into two categories:
The workforce will be one of the biggest tax issues for banks, with an onslaught of variations in income tax, national insurance and social security costs to consider from within the EU member states. The tax implications of moving operations abroad will ultimately affect their ability to attract and retain staff, handle staff costs and overall profitability.
It’s important that banks remain adaptable when considering all possible outcomes. In order to prepare, tax departments need to map out the potential changes to their operating model and the ensuing tax implications while also assessing the changes to UK tax legislation depending on the final deal the UK will make in exiting the EU.