Our recent Going for Growth survey, a nationwide research project exploring 530 privately owned UK businesses, showed a degree of optimism about Brexit; with many businesses believing it will present opportunities. Nonetheless, we felt it would be beneficial to obtain an alternative view from an EU member state, the Netherlands, during a recent international visit with Kreston.
Speaking at a Brexit seminar at Schiphol, Matthew Creevy and I learned that once the Netherlands had got over the initial shock of the UK leaving, and the potential knock-on effect that could transpire in some of the bloc’s Eurosceptic member states, there would be a significant [positive and negative] impact on the Netherlands, as well.
Tax consequences, such as import tariffs and duties, where costs may not be able to be passed onto customers were considered a catalyst, when combined with non-tariff barriers to trade, to a potential deteriorating market with the UK.
However, despite the lack of clarification on what Brexit means the Dutch have certainly moved into the 'action phase'. They have recruited 1,000 new customs officials and are already looking at new group structures which currently include a UK company.
The UK is currently seen as a good country in which to have an ultimate or intermediate holding company for European operations. This may well change if there is a ‘Hard Brexit’.
There is a clear intention on the part of the Netherlands to displace the UK from this role by capitalising on their jurisdiction which remains in the EU and retains access to the direct tax directives - which may support the tax efficient payment of dividends, interest and royalties.
For the UK and its economy there is of course optimism that the Dutch challenge can be met.
The UK retains an extensive and effective network of double tax treaties. And, of course, an effective headline rate of corporation tax which will be 17% by 2020; significantly lower than the current average corporate tax rate found in the EU.
The place for having a UK holding company may not have gone but Brexit has opened the doors for others too.
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