{"id":39729,"date":"2017-12-05T16:33:56","date_gmt":"2017-12-05T16:33:56","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=39729"},"modified":"2017-12-05T16:33:56","modified_gmt":"2017-12-05T16:33:56","slug":"the-eus-message-to-tax-havens-has-one-real-target-and-thats-the-uk","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2017\/12\/05\/the-eus-message-to-tax-havens-has-one-real-target-and-thats-the-uk\/","title":{"rendered":"The EU’s message to tax havens has one real target – and that’s the UK"},"content":{"rendered":"

Do you remember what Philip Hammond once had to say about the UK post Brexit? In\u00a0 January this year he went to Germany\u00a0 to declare that<\/a> Britain could transform its economic model into that of a corporate tax haven if the EU fails to provide it with an agreement on market access after Brexit. And now,\u00a0 eleven months later\u00a0 the EU has come up with\u00a0 what looks like an innocuous tax haven listing<\/a> until you read between the lines.\u00a0 As I have\u00a0 already noted<\/a>,\u00a0 implicit in this listing is a massive threat to at least five UK tax havens. The\u00a0 EU has given notice to Jersey, Guernsey, the\u00a0 Isle of Man,\u00a0 Cayman and\u00a0 Bermuda\u00a0 that they have to transform their entire corporate tax systems if they are to avoid the imposition\u00a0 of tax haven sanctions within a year.<\/p>\n

At one level\u00a0 you can read this as being the EU Code of Conduct on Business Taxation\u00a0 giving notice that they are fed up with these places having got round earlier sanctions,\u00a0 and I suspect that is true.<\/p>\n

More specifically,\u00a0 I think that there is a much deeper, implicit, and more important message inherent in this notice of intent,\u00a0 which is quite specifically targeted at the UK. What the EU is saying\u00a0 to Philip Hammond, and anybody else who cares to listen,\u00a0 is that we can think about becoming a tax haven if we so wish but if we do\u00a0 then a quite impressive list of sanctions will be imposed upon us. Of course\u00a0 that would imply the opening of a trade war between the UK and EU,\u00a0 but it was Hammond who fired the first shots in that, and\u00a0 retaliation is to be expected.\u00a0 I think it\u00a0 has arrived.<\/p>\n

There is one other point\u00a0 to note.\u00a0 I am quite sure that the Crown Dependencies will be taking comfort from the fact that many, if not most, of the funds they receive from the financial markets come from the City of London, which they expect to be outside the EU in the near future, meaning that the\u00a0 sanctions proposed by Brussels will not apply.\u00a0 I do not think that they should be too optimistic\u00a0 about that.\u00a0 My suspicion is that if Brussels thinks that the UK is helping these places get round EU sanctions\u00a0 then they will be imposed upon the UK instead.<\/p>\n

As\u00a0 a tax haven listing today's announcement looks to be innocuous, and even a failure<\/a>.\u00a0 As a warning shot\u00a0 to the UK,\u00a0 and Philip Hammond in particular,\u00a0 this looks like a broadside fired just across the bows. I think the UK\u00a0 would be very wise to take note:\u00a0 we can be a post Brexit tax haven if we wish,\u00a0 but sanctions would quickly follow\u00a0 and the cost to the City of London would be enormous.<\/p>\n","protected":false},"excerpt":{"rendered":"

Do you remember what Philip Hammond once had to say about the UK post Brexit? In\u00a0 January this year he went to Germany\u00a0 to declare
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