Newsletter issue 3 | 2016

Dear Reader

                 

Being a Europhile all my life, having lived in the Netherlands and France and worked throughout Europe, my first reaction when the question of the UK leaving the EU arose was "No way".  When David Cameron returned from his negotiating efforts a month or so ago, I felt pleased that our sovereign independence had been endorsed, that political union for us was clearly not going to happen, and that we maintained a steadfast exclusion from the Schengen area and the Euro.


And then the doubts crept in.  I have always thought the initial idea of a free trade association had been hijacked by bureaucrats intent on their political ambitions of a United States of Europe, a project which I think is doomed to monumental failure.  Indeed, I am sceptical about the longevity of the Euro and delighted we will share no part in its eventual downfall.  But do I really want the UK to share in the collapse of the European Union if the politicians refuse to curb the dictatorial directives coming out of Brussels.  


Boris Johnson’s support for the Leave campaign has not helped me decide one way or another.  If Cameron’s gamble on remaining in the EU fails, he could well be our next Prime Minister, and without even venturing to compare such an outcome with what I perceive as a disaster for the US if Donald Trump is elected President, Boris as our PM is not someone I would want to preside over a post Brexit period of instability.  His gung-ho approach to an independent UK doesn’t really address the true consequences of a potential exit of the UK from the European Union.


Perhaps the most emotive reason for the general population to want to leave the EU is the perception that immigration levels will fall and that we will not have to accept Eastern European migrants nor Turks, should they be accepted into the EU in the near future as envisaged. The risk of increased terrorism has been raised by Leave campaigners, although Remain campaigners say that continued co-operation with anti-terrorism squads in our neighbouring EU countries will be jeopardised if we leave the EU .  Who to believe?  Do we really think that our ex-EU partners will withhold information on terrorists and allow attacks to be made within the UK?


That’s one of the problems, scaremongering from each side confuses everyone.  But let’s continue to look at the immigration issue.  Countries such as Norway and Switzerland have negotiated separate trade agreements with the EU and one of the conditions of such agreements is that the freedom of movement of labour is upheld.  This means that all EU citizens may live in Norway and Switzerland if they choose to, and the sovereignty of these countries to close their borders to such migrants is therefore compromised.  It is very unlikely that the UK would be able to reach a different trade agreement to the ones that exist with Norway and Switzerland, and indeed the Leave group have pointed to these agreements as evidence that we will indeed be able to negotiate an agreement with the EU to demonstrate that trade barriers will not exist if we leave the EU.  So it is more than likely that we will have to accept the same level of migration from EU citizens as currently.


As for non-EU citizens, maintaining our non-Schengen status means we do indeed have control over our borders, even if internally we are sometimes lax in their execution.  So leaving the EU to reduce the level of migration seems to me something of a myth.


One of the events in the last few years which upset me the most was the way Cyprus was treated by the EU during its banking crisis of 2012.  Heavy handed and patently unfair, many Cypriot bank accounts were frozen with a maximum permitted withdrawal of €100,000 in total.  Those with more than €100,000 in bank accounts with Laiki Bank and Bank of Cyprus had to forfeit the excess in what most citizens would have identified as daylight robbery.  By remaining outside of the Euro, we do not risk the same level of control by the EU, but nevertheless their actions must serve as a warning to all countries that the dictatorship of bureaucrats working within the EU must be addressed.  This is something that the UK needs to consider should we remain in the UK, where our influence should be a material factor in persuading all politicians that similar actions should be made illegal in the future.  This may also help to ensure that member countries remain as sovereign states able to take their own decisions, even if they fall short of Euro requirements of fiscal management. This seemingly incompatible conflict is the reason why ultimately I believe the Euro is a failed concept in the absence of a political Super State, and why there will need to be at least two levels of currency with the Eurozone to cope with conflicting economic realities.  But as for Brexit, the UK is not within the Eurozone and maintaining the Great British Pound was probably the best political decision ever made!


Then we come to the economic benefits or otherwise of staying within the EU.  The downside is very real, the budgetary payments we make are very costly to our economy, and there are certain subsidies within the EU from which our businesses are unable to benefit, which may seem patently unfair.  So there is no doubt there is a cost of being a member of ‘the club’ of the EU; but that is the same with any club and one has to weigh the economic benefits against such costs.  From what I have read, most economists are squarely divided down the middle as to whether the costs outweigh the benefits or otherwise. That, of course, is normal for economists, but politicians for Leave or Remain have been unable to convince me that there is a clear economic benefit, one way or another.  I am sure that the majority of the country is unable to make a clear considered conclusion as to the economic benefits or otherwise, and therefore it seems to me that emotional arguments will prevail.


And this is where we are with scaremongering.  The Remain group say that we risk years of uncertainty, that the stock market will plummet affecting people’s pensions, that the pound will fall fuelling inflation and making our European holidays more expensive (if we are allowed in without visas!).  The Leave group say that the UK is one of the strongest economies in the world and will easily withstand maybe a couple of years of uncertainly (which the Remain group considers could last for a decade).  I don’t believe in either camp’s views; the UK will certainly survive an EU exit without a dramatic effect on our economy, yet there will be certain elements of the economy that will suffer.


One of these could be the role of the City of London as the world’s financial centre.  Another could be the ability of our service professionals to ‘passport’ their business into the EU. At best, there will be an inconvenience, at worst, a financial loss of revenue. But economic issues should not lie at the heart of our decision making, certainly not when they are uncertain and neither camp can demonstrate responsibly that they have a clear understanding of the consequences of a Brexit.  Nor should emotion govern the voting decision on June 23rd, especially when the understanding of what a sovereign state can control in terms of immigration is unclear.


What may eventually sway the vote should be the moral question of the role of the UK within the EU and the wider world.  One fact that is indisputable is that the EU has experienced decades of peace which have never before been experienced.  Should the UK leave the EU, it is my belief that this will be followed by other countries leaving the EU and the eventual disintegration of what was originally conceived as a free trade area with co-operation between countries in many areas of public life; police, travel, welfare, and the free movement of capital and labour throughout the EU.  By leaving the EU, maybe we are throwing away the baby with the bathwater!


Instead, we need to take a lead within the EU, perhaps along with Germany in particular, to ensure bureaucracy is curbed and perhaps to limit the accession of new countries by imposing new conditions of migration and welfare benefits.  If we cannot do this through co-operation, we should show our bulldog spirit by doggedly using our veto to create changes in the way the EU works.


So maybe I have made up my own mind as to how I am going to vote on June 23rd.  But I would love to hear from fellow IBSA members with their views, and their comments on what I have written above.  In the end, will it be our heart or head that votes?


Join the debate via our LinkedIn discussion group .


Yours Sincerely,


Roy Saunders

IBSA Founder & Chairman


Workshop

International Tax Disputes

Squire Patton Boggs, London, 12 April


It is expected that the number of international tax disputes between two or more countries (often with a taxpayer caught in the middle) will increase significantly as a result of the OECD BEPS initiative. Tax administrations may claim the existence of permanent establishments, or deny treaty claims, or simply claim a greater share of greater reporting obligations. Mutual agreement procedure has not yet been adequately developed to protect taxpayers from the prospect of expensive and lengthy disputes with tax administrations. What can be done to improve this? How to advise those caught up in these proceedings?


Develop an understanding of why international tax disputes are likely to proliferate over the next few years, including the issues causing concern to companies and their advisers. Plus, learn how Action Point 14 will create greater transparency and easier access for SMEs to use Mutual Agreement Procedures in the future and how tax authorities are likely to deal with these in a timely and cost effective manner.

Pricing*

£299 + VAT

 

*All prices are exclusive of VAT, Terms & Conditions apply. More information »

Upcoming events

Exit Strategies, Residence & Dynastic Planning for Families and their Businesses

Close Brothers Asset Management, London, 24 May, 17:45

IBSA Members might wonder what international family law has to do with international business structuring. The answer is a lot more than first appears on the surface! There has been a cross over between family and business life for hundreds of years. Owner managed businesses, HNWIs investing into businesses and the rise of the international family office mean that there are many issues that professional advisers should be aware of.


Panellists including Penny Lovell of Close Brothers, Liz Palmer of Howard Kennedy and Darren Hersey of Simmons Gainsford will provide expert insight into the following:


  • Residence Planning: what are the key issues? Why is it so important for the business?
  • Exit strategies: retirement, losing control, trade sales, mergers and selling the business, how to ensure the client has a clear strategy for the long term.
  • Keeping it in the family: trusts, beneficial ownership, risk diversification, pre nups and other issues arising upon divorce.
  • The Business of International Family Offices: Are emerging markets the next wave of business growth opportunities for the professional adviser?       



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For our Members

20% off IMF Courses

TOPICAL DISTANCE LEARNING COURSE ON TRANSFER PRICING

   

This unique Transfer Pricing distance learning course focuses on major Transfer Pricing issues and concerns that all professionals involved in the complex area of Transfer Pricing face, such as: BEPS, business restructuring and valuation, Transfer Pricing legislation and guidelines, documentation requirements per region/country, Transfer Pricing project and risk management, Transfer Pricing (pre-)controversy management, design and development of Transfer Pricing policies, types of intercompany transactions, intellectual property and customs.

   

This course starts each month and can also be studied online through digital learning (no additional costs).

    

   

Your offer

IBSA membership entitles you to a 20% discount on this course.

Full price: EUR 2,480

IBSA Member price: EUR 1,984



For more information please visit the IMF Academy site, or contact info@imfacademy.com, +31 (0) 40 2460220


DISTANCE LEARNING COURSE ON TRANSFER PRICING AND INTELLECTUAL PROPERTY


With the shift towards a more knowledge-based and service-oriented economy, intangible assets such as trademarks, brands, patents, know-how and technology, account for an increasing part of the business value. The accurate and complete taxation and valuation of Intellectual Property (IP) and other intangible assets is therefore essential.


This unique course on Transfer Pricing and Intellectual Property discusses intangibles from the complementary perspectives of Transfer Pricing and valuation.


This course, which can also be studied online, starts each month.



Your offer

IBSA membership entitles you to a 20% discount on this course.

Full price: EUR 1,584

IBSA Member price: EUR 1,984


For more information please visit the IMF Academy site, or contact info@imfacademy.com, +31 (0) 40 2460220


Members are encouraged to submit articles to the knowledge bank by contacting joanna.bott@istructuring.com

The Changing Landscape for IP Regimes Around the World

Bernhard Gilbey - Squire Patton Boggs

Patent Boxes, Innovation Boxes, Intangible Property Boxes, Knowledge Development Boxes (IP Regimes) – countries may use different names, but all of these regimes are designed to allow a preferential rate of tax to be applied to income generated from intangible property (IP).

Charles Savva, Managing Director and Head of Tax, at C. Savva & Associates Ltd rounds up the latest DTT news from Cyprus.


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