The French government is pledging to make the country's tax regime for expats the most favourable in Europe in a move aimed at attracting banks and other financial institutions in London considering relocating after Britain's referendum vote to leave the European Union.
The Spanish government has also embarked on a review of its corporate tax laws with the aim of making the country more appealing to banks and multinationals looking to move out of the UK in the wake of the Brexit vote.
Last week, Giuseppe Sala, Milan's mayor, also met Andrea Enria, chairman of the London-based European Banking Authority – the EU's financial watchdog – to urge he move the authority to Italy because of the outcome of the UK referendum.
But Manuel Valls, the French prime minister, went further when he told a meeting of Europlace, the French financial industry lobby group, "We want to build the financial capital of the future. In a word, now is the time to come to France."
The UK government, all too aware of the likelihood of companies relocating as a result of a Brexit, has promised to cut corporation tax rates to 15 per cent – the lowest among major economies – though Wolfgang Schaeuble, Germany's finance minister, has warned against a "race to the bottom" of competitive tax cuts in the aftermath of the referendum.
However, the French clearly sees the outcome of last month's vote as an opportunity to boost Paris's standing as a financial sector, even though the government of President Francois Hollande has a history of ambivalence towards the industry, which is subject to high taxes, allied to strict labour laws.
"We are bringing solutions today to companies that are asking questions and expecting answers to prepare for the future," Mr Valls said, adding that France's already favourable tax regime for expatriates and for French nationals returning from working abroad would be extended from five to eight years.
The scheme includes deductions for non-salary perks, such as employers paying for employees' children's school fees, and for revenue earned on capital held abroad. The prime minister also pledged that French schools would open as many specialist classes for non-French speaking pupils as necessary.
And Mr Valls said the government would establish a one-stop administrative point for foreign firms seeking a foothold in France with service in languages other than French.
Additionally, Francois Villeroy de Galhau, governor of the Bank of France, said French regulators would fast-track applications from financial institutions currently licensed in the UK but now seeking to set up in France. "We are not in a war with London, but there is competition and we want to make Paris Europe's top financial centre," he said.
The Wall Street Journal commented, "The ostentatious attempt to siphon businesses and finance from London shows how France has quickly moved to capitalise on the Brexit vote, even if it could take at least another two years before the UK formally leaves the EU.
"The French government has called for a swift exit of the UK and insisted the country cannot have access to the single market – in particular for financial services – if the British government refuses to play by the rules of the EU. That could oblige some companies to set up in other EU countries to keep easy access to the EU’s single market."
The crucial question to be resolved in the Brexit negotiations is whether or not British financial institutions will be able to retain the "passport" that allows them access to EU markets. France and other members of the bloc are opposed to allowing continued access, unless Britain continues to accept the free movement of people across the continent, which the successful 'leave' campaign vociferously opposed.
Read analysis of what the vote to leave the EU may mean for for the global mobility industry in Brexit is a reality – a new era for global mobility? by Relocate Global's managing editor, Fiona Murchie.
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