The impact of Brexit is being felt globally and locally

Houston-based ATM operator will consider moving place of incorporation to United Kingdom

ATM owner and operator Cardtronics is holding a stockholder meeting Tuesday to determine whether it will move its place of incorporation to the United Kingdom. The event, which was scheduled in April, falls days after the U.K. shocked the world by voting to leave the European Union.

“Cardtronics carefully evaluated both potential outcomes of the Brexit vote in advance of announcing our plan,” a spokesman said in an email. He declined further comment.

In April, the company, currently based in Houston and incorporated in Delaware, cited its substantial business presence — including about 60 percent of its global workforce — in the U.K. and other reasons for the move. It also said it could more effectively compete for global acquisitions and benefit

from a “more competitive U.K. tax environment.”

Brexit, as the U.K.’s exit from the European Union is being called, doesn’t change those tax benefits, said Bret Wells, associate professor of law at the University of Houston Law Center and an expert on tax inversions.

“This is a U.S. play,” he said. “It is reducing their U.S. tax on their U.S. business. That fundamental financial advantage has not changed.”

Wells said Cardtronics’ move is a tax inversion, a sometimes-controversial maneuver to lower a company’s U.S. tax burden. The company in April denied that characterization because “it is not the merger or acquisition of Cardtronics by an unrelated foreign company.”

Wells said Cardtronics may be employing a lesser-used tax inversion technique in which more than 25 percent of its assets, people and revenues are in the country where it is incorporating the new parent company.

Such inversions provide opportunities for companies to maintain their U.S. operations and then strip profits from those operations to affiliates incorporated in countries with lower taxes. If a company is based in the U.S. but has global operations, for example, it has to pay taxes on all profits brought back to the U.S.

With an inversion, the company moves its parent company abroad and makes the U.S. business a subsidiary. It can then open another subsidiary based abroad that uses loans, licensing fees or royalties to take money from the U.S. company in a way that reduces its tax obligation in the U.S. The taxes will then be paid in a country that has a lower tax rate, Wells said.

Wells said the United Kingdom does not make businesses pay taxes on active profits they earn in other countries and then bring back to the U.K.

If the company’s plan is approved by stockholders, Cardtronics’ European headquarters will be in London and its North American headquarters will remain in Houston. The change is expected to happen early in the third quarter.