Brexit, Trump and elections: the impact on your business. Amsterdam, 23 March 2017

Transcription

1 Brexit, Trump and elections: the impact on your business Amsterdam, 23 March 2017

2 AGENDA The emerging new world order and its economic consequences 2 The election: lesson learnt 3 Dealing with taxes in a changing world 4 Brexit from a legal perspective

3 "The emerging new world order and its economic consequences" Marcel Baartman NBCC/SANEC Event 23 March 2017

4 Turbulent Times

5 Context Two Tectonic Drivers Four Geopolitical Trends Geopolitical Events Economic Consequences

6 Economic International Power Shift Military Source: IMF Source: IISS Source: Goldman Sachs Source: PEW Research

7 Rising Discontent Source: Branco Milanvic Source: OXFAM

8 Rising Populism Source: Parties-and Elections EU

9 Geopolitical Trends New World Order Rising Populism Renationalism Retreat Neoliberalism

10 Consequences Geopolitcial Trends Geopolitical Consequences Economic Consequences More powers active Increasing uncertainty New Worldorder Overlapping security issues More usage geo-economic instruments Increasing regional tensions and instability higher insurance costs More dependencies economies Chinese OBOR initiative Global agenda Lower taxes Anti-establishment Short-term economic growth Econonic Nationalism Growing private consumption Direct forms of democracy Growing investments Rising Populism More authoritarian leadership elements Increasing volatility financial markets Sovereignity instead of supranationalism Lower savings Tackling existing institutions and norms Higher deficits and debt ratios governments Increasing xenophobic nationalism More supply government paper Improving financial stability More unpredictability policies Diminishing convergence Increasing arbitrage-possibilities companies Retreating Neoliberalism Changing norms and values international relations Higher costs due to sub-standardisation Reticince internal role Western countries Deteriorating level playing companies Increasing uncertainty rules and procedures

11 Consequences Geopolitcial Trends Geopolitical Consequences Economic Consequences More investments in infrastructure & defense Higher inflation Increasing demand commodities Alternatives financial system Additional political checking international M&A More usage sanctions Less stability UN, EU, WTO etc. Repulsing non-state actors Larger interest differentials in EU Emphasizing sovereignity Pressure on independence central banks Decreasing role supranationals and multilateral Usage contractual savings for economic Renationalism Bilateral axes More bilateral agreements Geo-economic instruments Diminishing economic growth emerging Increasing policy competition Increasing protectionism More interventions FX-markets Race to bottom on tax policies Repatriating foreign revenues and cash Deteriorating world trade Spill-over effects protectionsm Cost-push inflation Deteriorating possibilities GVC's Diminishing possibilities cash management Decreasing remittances

12 More information

13 AGENDA 1 2 The emerging new world order and its economic consequences The election: lesson learnt 3 Dealing with taxes in a changing world 4 Brexit from a legal perspective

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27 AGENDA The emerging new world order and its economic consequences The election: lesson learnt Dealing with taxes in a changing world Brexit from a legal perspective

28 Tax and the Dutch investment climate Robert van der Jagt Chairman KPMG s EU Tax Centre 23 March 2017

29 How much tax do you pay on an annual income of Euro 35,000? 1. Single employee? 2. Single unemployed? (WW-uitkering) 3. Starting entrepreneur? 4. Single retired person? 1. Euro 8, Euro 11, Euro Euro 4, Meijburg & Co, Tax Lawyers, is an association of limited liability companies under Dutch law, registered under Chamber of Commerce registration number and is a member of KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 29

30 1,000 4,000 7,000 10,000 13,000 16,000 19,000 22,000 25,000 28,000 31,000 34,000 37,000 40,000 43,000 46,000 49,000 52,000 55,000 58,000 61,000 64,000 67,000 70,000 73,000 76,000 79,000 82,000 85,000 88,000 91,000 94,000 97, , , , , , , , , , , ,000 60% Marginal Income Tax Rates 2012 & ,6% 50% 40% 30% 20% 10% 0% Meijburg & Co, Tax Lawyers, is an association of limited liability companies under Dutch law, registered under Chamber of Commerce registration number and is a member of KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 30

31 Rapidly Changing Environment in Tax Trends of the past five years: More global coordination: - G7, G20 - OECD - EU 1. The fight against aggressive tax planning (Luxleaks) OECD BEPS Project 2. The fight against tax evasion (Panama Papers) Exchange of information (Common Reporting Standard, UBO register) 3. Convergence of tax systems, but reduction of corporate tax rates 2017 Meijburg & Co, Tax Lawyers, is an association of limited liability companies under Dutch law, registered under Chamber of Commerce registration number and is a member of KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 31

32 State aid investigations by the European Commission: Creating a level playing field State aid: Commission extends information enquiry on tax rulings practice to all Member States Brussels, 17 December Meijburg & Co, Tax Lawyers, is an association of limited liability companies under Dutch law, registered under Chamber of Commerce registration number and is a member of KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 32

33 Disruption 1: Brexit - 29 March 2017: Notification 2017 Meijburg & Co, Tax Lawyers, is an association of limited liability companies under Dutch law, registered under Chamber of Commerce registration number and is a member of KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 33

34 Disruption 2: US Tax Reforms 2017 Meijburg & Co, Tax Lawyers, is an association of limited liability companies under Dutch law, registered under Chamber of Commerce registration number and is a member of KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 34

35 Corporate Income Tax Rates around the world 35% 30% 25% 20% 15% 10% USA Belgium France Japan NL China UK Singapore Ireland 2017 Meijburg & Co, Tax Lawyers, is an association of limited liability companies under Dutch law, registered under Chamber of Commerce registration number and is a member of KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 35

36 Corporate Income Tax Rates around the world 35% 30% 25% 20% 15% 10% USA Belgium France Japan NL China UK Singapore Ireland 2017 Meijburg & Co, Tax Lawyers, is an association of limited liability companies under Dutch law, registered under Chamber of Commerce registration number and is a member of KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 36

37 Corporate Income Tax Rates around the World 35% 30% 25% 20% 15% 10% USA Belgium France Japan NL China UK Singapore Ireland 2017 Meijburg & Co, Tax Lawyers, is an association of limited liability companies under Dutch law, registered under Chamber of Commerce registration number and is a member of KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 37

38 How should the Netherlands react? Goal: maintain an attractive investment climate - Corporate tax rate must remain competitive - Retain 30%-ruling for expatriates and change in a prudent manner - Reduce the high marginal individual tax rate on lower incomes - Abolish dividend withholding tax 2017 Meijburg & Co, Tax Lawyers, is an association of limited liability companies under Dutch law, registered under Chamber of Commerce registration number and is a member of KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 38

39 All activities performed and all services rendered by Meijburg & Co are subject to its general terms and conditions, filed with the Dutch Chamber of Commerce. Meijburg & Co, Tax Lawyers, is an association of limited liability companies under Dutch law, registered under Chamber of Commerce registration number and is a member of KPMG International Cooperative ("KPMG International"), a Swiss entity. The general terms and conditions are available on the Meijburg & Co website ( and will be supplied upon request.

40 AGENDA 1 2 The emerging new world order and its economic consequences The election: lesson learnt 3 Dealing with taxes in a changing world 4 Brexit from a legal perspective

41 Some legal observations on Brexit Gerard Kastelein 23 March 2017 Allen & Overy 2017

42 What does a Brexit mean? Allen & Overy

43 Biggest demerger in history Allen & Overy

44 A hard Brexit is the expected outcome Norwegian model Swiss model EEA membership Bound by single market rules but with reduced power over rules Norway pays 90% per capita of what UK pays no say, but pay No need to negotiate trade agreements with other nations EFTA membership plus multiple bilateral treaties with EU Lack of institutional framework to ensure arrangements keep pace with EU laws Took Switzerland 16 years to negotiate Unlikely to be on offer from EU side Turkish model Limited access to single market Not attractive Canadian model Free trade agreement negotiated 7 years to negotiate, still not ratified WTO model No access to single market Allen & Overy

45 UK companies will lose benefit of over 50 Free Trade Agreements and must fall back on WTO if not replaced UK to Europe Europe to UK UK to 3 rd state with EU FTA eg South Korea 3 rd 3 rd State State Allen & Overy

46 Dual regulations = inefficiencies / costs for businesses Public procurement IP/Data protection Product safety Environment Life sciences Exit arrangements should clarify the position and the UK may well retain much of the existing regimes Allen & Overy

47 Impact on customs union, VAT and withholding taxes UK will probably cease to be part of customs union but.. FTA with no/low customs duties likely Import VAT may be imposed when goods enter EU from UK and vice versa resulting in possible higher costs More withholding taxes on interest, dividends and royalties are possible but. double tax treaties can provide relief in many cases Allen & Overy

48 No more freedoms of movement of goods, services, capital and employees access to the internal market denied from the UK Example: financial services post Brexit Key: Can access clients Cannot access clients (simplified) Allen & Overy

49 Contingency planning is happening. Frankfurt, Madrid, Dublin, Paris, Luxembourg, Amsterdam etc lobby for jobs esp in financial services industry Allen & Overy

50 Some factors clients say influence location Proximity to supervisors (ECB, EBA etc) Presence of licensed affiliate Size of local financial centre Labour law Bonus cap Perceived friendlyness of supervisors What peers do Other (Infrastructure, culture, tax, schools, housing, language, etc) Allen & Overy

51 For more information go to: Contact details: Gerard Kastelein Partner Tel Mob Gerard.kastelein@allenovery.com These are presentation slides only. The information within these slides does not constitute definitive advice and should not be used as the basis for giving definitive advice without checking the primary sources. Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP s affiliated undertakings. Allen & Overy