Brexit Drains Swamp in London, Creatures Crawl to Luxembourg

Brexit Drains Swamp in London, Creatures Crawl to Luxembourg by Wolf Richter

Tax planning for a post-Brexit world.

In its report on the “world’s worst corporate tax havens” last December, Oxfam rated Luxembourg in 7th place, behind Bermuda, Cayman Islands, the Netherlands, Switzerland, Singapore, and Ireland.

But the “City of London,” a largely autonomous square mile within London where the threads of global finance meet, was given a special mention: The number one “unexpected absence” from the list of the top 15 worst tax heavens. Oxfam’s report put it this way:

The UK’s City of London is at the centre of a web of Crown Dependencies and Overseas Territories, over which the UK wields both official and informal influence. The 14 Overseas Territories include the Cayman Islands, the British Virgin Islands and Bermuda, and Jersey is one of the UK’s three Crown Dependencies. As Jersey Finance, the official marketing arm of the Jersey offshore financial centre, puts it, “Jersey represents an extension of the City of London.”

There were plenty of reasons for financial outfits of all kinds to settle in the City of London. But now that Brexit will likely throw a monkey wrench into unfettered access to the European Union for these firms, they need to head to the continent. And tax haven Luxembourg appears to be a big beneficiary in a post-Brexit world.

Nicolas Mackel, the head of Luxembourg’s financial development agency Luxembourg for Finance told Reuters today that private equity firm Blackstone was among “three or four” major private equity firms that picked Luxembourg for their EU subsidiaries. But he wouldn’t name the other PE firms since they hadn’t yet made their decisions public.

One bank also decided to set up shop in Luxembourg, he said without naming names, while “10 to 20” are planning to expand their current operations in Luxembourg. He wouldn’t say which banks, but they all have operations in Luxembourg, such as J.P. Morgan Asset Management Luxembourg.

Four or five “big name” asset managers were also planning to set up operations in Luxembourg, Mackel said, following Prudential Investment Management and international asset manager M&G Investments in their decisions.

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Wolf Richter

In his cynical, tongue-in-cheek manner, he muses on WOLF STREET about economic, business, and financial issues, Wall Street shenanigans, complex entanglements, and other things, debacles, and opportunities that catch his eye in the US, Europe, Japan, and occasionally China. WOLF STREET is the successor to his first platform… TP-Title-7-small-200px …whose ghastly name he finally abandoned in July 2014. Here’s the story on that. Wolf lives in San Francisco. He has over twenty years of C-level operations experience, including turnarounds and a VC-funded startup. He earned his BA and MBA in Texas and his MA in Oklahoma, worked in both states for years, including a decade as General Manager and COO of a large Ford dealership and its subsidiaries. But one day, he quit and went to France for seven weeks to open himself up to new possibilities, which degenerated into a life-altering three-year journey across 100 countries on all continents, much of it overland. And it almost swallowed him up.