Checking in on Brexit
Following what turned out to be an infamous referendum on June 23, 2016, Britain is set to leave the EU on March 29, 2019. The decision stunned the 48.1 percent of citizens who voted to remain. Theresa May’s activation of Article 50 and the two-year exit process has sparked a flurry of discussions across the board. With so much chatter, doomsayers and legal jargon, staying on top of Brexit’s implications is hardly straightforward.
The EU Withdrawal Bill will head back to the House of Commons next month, facing unsatisfied lawmakers who disapprove of its power distribution. Immediately following Brexit, the Bill declares that EU law will be transferred into UK law to prevent a legal vacuum. Due to the sheer scale of legislation that will arrive, the Bill gives lawmakers the opportunity to amend and repeal as necessary without engaging in standard parliamentary procedures. Herein lies the concern.
Wales and Scotland, in particular, want to see the Bill amended to curtail Westminster’s power after the Brexit, reminding that they did not take back powers from the EU only to then give them to London.
It is likely that the EU Withdrawal Bill will not be debated until midNovember at the earliest.
Issues Arising From Brexit
1) How and when will the EIB return Britain’s investment?
The UK, one of the biggest shareholders in the Luxembourg-based European Investment Bank (EIB), has €3.5 billion in capital at the bank and investments worth an estimated €10.1 billion. While the EIB has acknowledge that it will need to pay back the €3.5 billion, it will likely not do so until the loans are amortized in 2054.
2) How much will the UK contribute financially after it leaves?
The EU has informed the UK that it is responsible to meet payments that extend beyond 2019. London has said it will continue contributing to the EU budget for a further two years after exiting, but refuses to give details now. As with most divorces, this touchy financial issue will likely determine how happy both sides end up.
3) How will the European Court of Justice (ECJ) fit into all of this?
While the ECJ will have power over the transition process, an annoyance to the UK, its future jurisdiction is more blurry. Last week, for example, the head of Air France-KLM Jean-Marc Janaillac insisted that, in order to operate in Europe, British airline companies would be subject to the ECJ’s control — a tough pill to swallow for Brexiters allergic to interference from the Court.
Luxembourg Emerges as London Alternative
Unfortunately, headlines from October 2017 mirror those of October 2016. Britain still must propose how to solve a variety of sticking points. To what extent will it be able to benefit from the single market? What about cross-border projects? What will change for migrants and, specifically, all of the commuters who live in London but work in Luxembourg? How will students be affected?
Realizing that this uncertainty will not end quickly, companies and professionals based in the UK but operating within the EU have taken the precautionary measure of moving their legal residences to EU countries. Luxembourg has become a popular option for this group — with its multilingual population, central location, innovation and pro-business environment.
Insurers RSA, AIG and Hiscox have chosen Luxembourg to be the home of their post-Brexit headquarters in Europe. Citigroup, one of the largest banks in the US, is setting up an administrative hub here as well. Julius Baer is on that list too, choosing to move the center of its EU activities to Luxembourg. Bank of Singapore recently selected the Grand Duchy, rather than London, as the hub for its entry into Europe.
How Fiduciary Tucci & Partners Can Help
The futures of many professionals and companies, small and large, hinge on the decisions British legislators are working to agree upon and how the EU reacts. With over 300 amendments and 50 new clauses put forth, as well as ongoing delays, the uncertainty has not lifted.
If you have found yourself or your business strained by Brexit, Fiduciary Tucci & Partnerscan help. For those based in London, finding a new EU hub could protect critical customer or investor confidence. As a fiduciary, the interests of our clients determine our every move. We can clearly lay out your many options based on your particular circumstances and goals.
With years of experience in company setup in Luxembourg, we will serve as your local partner, ensuring that the country’s regulations are not working against you. Through our range of corporate services — VAT, business license, payroll, tax and bookkeeping — your company’s organization, management and administration can achieve its full potential.
Share your goals with us & ask how we can help you get there. Questions about trends, regulations & requirements? Curious about Luxembourg? Fiduciary Tucci & Partners can help answer your queries & find solutions.