Banks call on Macron to rethink tax regime after Brexit

65
3
Banks call on Macron to rethink tax regime after Brexit

Paris has become the spot for banks' markets operations, as cities like Frankfurt and Dublin have made it an ideal location for them to operate.

The Brexit vote has resulted in hundreds of traders moving from London to Paris, partially thanks to 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 policy as firms face a talent crunch in the French capital.

The Le régime des impatriates - commonly known as the 'expatriate tax law' - has been a crucial factor in bringing highly tethered traders to Paris in the wake of Brexit. The French capital has now become a major European hub for many of the biggest Wall Street banks.

The program offers several incentives for those who are relocating to France, including a more favorable tax rate on income and bonuses. Under the scheme, a foreign worker can expect up to 30 percent of their earnings to remain tax-free.

In addition, they will lose this benefit when they switch to a new employer. This is causing headaches for banks looking to expand their Paris trading hubs, Financial News said in a statement.

The exatriated tax system was one of many structural reforms implemented by President Emmanuel Macron in 2017 to lure international financial service firms to Paris.

The French capital has been the spot for banks' markets firms, with Frankfurt and Dublin among the top cities. The capital, Paris, has now become the main European hub for hundreds of traders from Wall Street banks who have chosen the French capital after Brexit as their main EU hub. Among them are Bank of America, Citi, Goldman Sachs, JPMorgan and Morgan Stanley.

The initial Brexit moves included emigration of staff from the UK to Paris, as well as relocating staff from the UK. Now banks are looking to hire on the ground to bolster their teams. This often means poaching from Wall Street rivals, said executive vice president George N. Bush.

The tax system is becoming'very problématique' as it continues to hire traders, a head of France at a major US investment bank.

The head of another Wall Street bank that set up in Paris before many of its peers said they had lost staff to expansionary rivals in recent months. They also said that replacements are becoming more expensive as new recruits demand bigger salaries to make up for the loss of tax benefits.

It has lost a lot of good people and while Paris has become much larger as a financial centre, the hiring market remains nowhere near liquid enough.

Paris Europlace's Simon said that international 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.

How can I contact Paul Clarke, Editor-in-Chief of The New York Times, with questions or clarifications regarding this story?