London or Paris? Choice proves a taxing question for bankers
LONDON (Reuters) – Forget fine wine, haute cuisine and art. The big question from London’s bankers for a French delegation trying to lure them to Paris was: How much tax will I pay?
“Most were interested in income tax and executive tax on pay,” said Gerard Mestrallet, the president of France’s finance industry lobby Europlace, who led Monday’s road show.
More than 80 representatives from banks and business met with authorities from Paris who are highlighting the attractions of the French capital if Britain’s exit from the European Union forces the relocation of some activities to continental Europe.
Global banks and insurers have begun signaling how they cope with a “hard” exit from the EU, after Prime Minister Theresa May said Britain would leave the single market.
And Brexit has opened up “fierce competition” among the main financial cities of Europe, including Paris, Frankfurt, Dublin and Luxembourg, said Valerie Pecresse, the head of the wider Paris region.
HSBC, Europe’s biggest bank, has said it could move some of its operations to Paris, where it has a subsidiary that holds most of the licenses needed by an investment bank thanks to its purchase of CCF in 2000.
LABOR-LAW CONCERNS
Pecresse estimated that the French capital could attract about 10,000 jobs, although bankers at the event raised concerns about French tax rules and labor laws as a possible deterrent.
“The expatriate regime has dramatically improved, but there are also some concerns about labor flexibility,” said Mestrallet, who is chairman of French utilities Engie and Suez.
The French government introduced extra tax concessions for expatriates last year in the hope Paris could profit from Brexit. But experts say other centers with more flexible labor and tax rules are likely to be bigger beneficiaries.
With the exception of HSBC, most financial firms have yet to make a decision on relocation plans to Paris, according to Mestrallet.
“Many will wait three months to have more clarity on the outcome of the French elections,” he said.
Germany is also seeking to attract finance jobs from Britain. The country’s senior regulators met about 50 envoys from foreign banks last week to explain how they could move business to Europe’s biggest economy after Britain leaves the EU, German financial watchdog Bafin said.
But the Parisian delegation thinks it has the upper hand.
“When was the last time you took your partner for a weekend to Frankfurt,” quipped Pecresse.