Brexit: what are the consequences and how to prepare?
A webinar on what to expect
Now that the UK government has officially triggered Article 50 to leave the EU and has announced an early election, it is clear that serious consideration of the Brexit is imperative. What will be the consequences of Britain leaving the EU for companies that are active in the Netherlands as well as in the United Kingdom, and how can they prepare for these consequences? In a webinar hosted by Deloitte on April 19, experts elaborate on this topic.
- Herman Van Rompuy's personal perspective
- Brexit from a UK perspective
- The impact on tax and talent
- The impact on financial services
Herman Van Rompuy's personal perspective on Brexit
Herman van Rompuy is the first speaker of Deloitte’s webinar and talks about the opportunities and challenges of Brexit from an EU perspective. The president of the European Policy Center --formerly the first president of the European Council -- elaborates on what is going well: the eurozone’s average economic growth since 2014 is 1.7 percent; employment opportunities have grown with 5 million jobs; the massive migration via Turkey has almost completely stopped.
Another positive aspect is that since the announcement of Brexit, the EU has been surprisingly united. In every country of the EU27, support for the EU has grown. There are, however, a few challenges for the EU concerning Brexit. The desired free trade agreement must be unanimously approved by each parliament of the EU27; this comes against a backdrop where each country will defend its own interests. Furthermore, the longer the negotiations on the free trade agreement takes, the more uncertainty it will bring to EU citizens, the financial sector, and investors.
Regardless of the outcome, Van Rompuy concludes that the level of unity in the EU has been remarkable and that external 'threats' such as Brexit brings the EU-27 closer together. In fact, Mr Van Rompuy states that Brexit could be a motivation for the EU-27 to relaunch a new European agenda, since there was already a need for it before Brexit came into the picture.
Replay the webinar
Brexit Webinar April 19, 2017Replay the webinar
Brexit from a UK perspective
The Dutch economy, with its close proximity and economic, trade and historical ties to the UK, is especially exposed to Brexit. The Netherlands is the second largest owner of assets in the UK and the UK the third largest market for Dutch export. The UK economy has proved more resilient to the initial shock of the Brexit vote than widely expected, but the central question is how the eventual Brexit settlement is likely to affect UK growth in the long run says Ian Stewart, partner and chief economist at Deloitte.
Stewart argues that Brexit is one of many factors that will influence the path of the UK economy in the long run. The key uncertainties relate to tariffs, non-tariff barriers and the movement of people. But Brexit, as the biggest change in the business environment since Britain’s entry to the EU, could also act as a catalyst for business-positive structural change.
Sally Jones, the Director for International Trade Policy, argues that companies have to prepare for the possibility that business with the UK will fall under the terms of World Trade Organisation trading - the scenario of maximum change. This is a sensible precaution; there may be a gap between the formal Brexit and the new free trade agreement, when WTO terms will be put into place. Most companies are familiar with these terms, and working under this extreme scenario makes going back to a less extreme scenario easier than the other way around.
Potential corporate tax and customs impacts for Dutch companies
Peter Kavelaars talks about the tax consequences of Brexit, which will strongly depend on the new tax arrangements the UK has to put in place. Kavelaars is the Director of Deloitte’s Dutch Scientific Office as well as a professor of Fiscal Economics at the Erasmus School of Economics and University of Curacao. Changes in all kinds of taxes are expected: VAT, for example, can be converted into another type of turnover tax; regarding corporate tax, tax treaties will become more important; import duties between the EU and UK will increase administrative burdens. The Brexit well allow the UK room to introduce highly attractive tax regulations towards corporations. Individuals living in the UK are likely to be confronted with changes in the social security system.
Caroline Zegers underlines this last point in her commentary. Zegers is the Partner for Global Employer Services, speaking about the movement of talent and how companies should respond. Brexit will influence current mobility between the UK and the Netherlands - Zegers’ most important advice to companies is to inventorise EU and UK nationalities working within their organisations and take measures to comply to the rules that apply after Brexit.
The financial services perspective
Brexit means firms in the UK will no longer benefit from the ‘passporting’ regime that has been established under certain EU legislative acts, says Simon Zeital, Partner for Head of Structural Reform at Deloitte. Financial services firms are now considering their new preferred location: banks look towards Frankfurt and Ireland as their new jurisdiction, asset-management organisations to Luxembourg and Ireland, and insurance companies towards Malta, Benelux and Ireland. Zeital concludes that financial services are currently ahead of other companies when it comes to preparing for the Brexit. This is necessary, he argues, as financial services firms face the challenge of moving their activities elsewhere and thus require certainty.
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