Paris has become the destination for banks' market operations, overcoming cities like Frankfurt and Dublin.
Hundreds of traders from London have moved to Paris following Brexit, attracted in part by generous tax breaks that allow them to take home more of their pay.
Now banks and lobby groups are calling for an overhaul of this regime as firms face a talent crunch in the French capital.
In the aftermath of Brexit, France's Le régime des impatriates, commonly known as the 'expatriate tax law', has been essential in attracting highly-skilled traders to Paris. The capital has become a major European center for many of the top Wall Street banks, leading to its becoming a major European hub.
The scheme offers a variety of incentives to those relocating to France, including a higher tax rate on income and bonuses. Under the scheme, emigrants can expect up to 30 percent of their earnings to remain tax-free.
When they move to a new employer, however, they lose this benefit. This is causing headaches for banks looking to expand their Paris trading hubs, according to financial news.
The exatriate tax regime was one of several structural reforms in 2017 by President Emmanuel Macron, part of a charm offensive to draw in international financial services firms to Paris.
The French capital is now the hub for banks' markets operations, surpassing cities like Frankfurt and Dublin. Wall Street banks are now the go-to destination for hundreds of traders from Wall Street banks who have chosen the French capital as their main EU hub after Brexit. These include Morgan Stanley, Citi, Goldman Sachs, JPMorgan and Bank of America.
The initial Brexit moves involved relocating staff from the UK to Paris. But now banks are hiring on the ground to bolster their teams. This frequently means poaching from Wall Street rivals, said executive vice president George W. Bush in a statement to FN.
A head of France at a major US investment bank said the tax regime was becoming'very problématique' as it continues to hire traders.
The executive of another Wall Street bank set up in Paris before many of its peers said they had lost staff to expansionary rivals in recent months. The search for replacements is becoming more expensive, as new recruits demand higher salaries to make up for the loss of tax benefits.
The hiring market is nowhere near liquid enough, they said, and we have lost a lot of good people and while Paris has become much larger as a financial centre.
Paris Europlace's Simon said that foreign banks are in favor of adjusting the tax regime to allow for job changes, even if that raises the possibility that rivals will poach their staff.
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