FINANCIAL SERVICES PROJECTS IN A POST-BREXIT WORLD
A lot has been written in lead up to the Brexit and since. One of the major surprises in Brexit has been the lack of specific Financial Services legislation. While the agreement, which was announced on Christmas Eve, set out rules for industries such as fishing and agriculture, it did not cover the financial services sector. At the same time, the ability to service cross-border in the financial industry is often neglected. We investigated this further as some of our clients have already faced high costs for dealing with non-EU staff. We highly recommend avoiding this pitfall.
The Dutch Financial newspaper FD, published a telling article in the wake of the Brexit, suggesting that the London City had been forgotten during negotiations. The (Dutch) association for asset management published an article stressing that much remains unclear  and that MiFiD regulated parties should treat this as a hard Brexit. In any case it is clear that we are still dealing with many unknowns. More recently this has led to the Italian government to explicitly extend some of the operations in their borders up to (only) 30-06-2021.
As expected, British financial companies no longer have direct access to most EU markets post-Brexit, without authorisation. What we saw transpire in the lead up to Brexit, was that many Great Britain based companies in Financial Services fled to European destinations. One of the most popular destinations was Amsterdam. The Dutch capital is home to the world’s oldest stock exchange and is attracting many people and parties who are interested in finance and trade. The Dutch government has over time been in talks with over 250 companies to transfer to Amsterdam before Brexit.
Now that Brexit has happened, many stories are emerging of companies facing difficulties working cross border. In fact, this weekend it became clear that even the British government itself is advising companies to set up operations in the EU. Companies buying British services can no longer defer VAT, increasing costs for dealing with UK firms. In effect, companies dealing with UK entities must submit an import declaration and pay VAT to Customs. An alternative is to make a VAT declaration instead, requiring the right permits.
This brings us to cross border servicing. At LeadingMile, we often partner on projects with companies from the UK and other (non-EU) countries. Since last year this has meant dealing with additional legislation. While you would think that companies operating in the Financial industry are very aware of local legislation, we have found that this is the case more often than not. Consultants traveling from the UK or countries like Serbia to European destinations have to deal with the local government. In many cases this means applying for permits as well as registering and announcing all travel ahead of time.
Working cross-border post Brexit can limit the flexibility of staffing, which is crucial on every project and change initiative. On top of that, it also means that administration and associated costs can increase significantly. Eventually this can sway your business case for your project entirely. We would therefore highly recommend taking this into account upfront and deal with EU registered entities wherever possible if your company is based in Europe.
While international labour law is not our core business, we believe it is fair to warn (potential) clients to the risks they run staffing projects in a post-Brexit world. The fact remains that the client who is purchasing services remains (at least partly) responsible and liable for following the letter of the law. A consideration here is that all your external staff must follow local legislation. We have seen some of our clients rack up staggering legal and advisory bills just to deal with UK and other non-EU parties or their staff.
Of course all of this can be avoided by doing business with local parties and with people who are accustomed to the local ways. At LeadingMile we combine local and international experience. While we have a distinct focus on servicing the European market, we also make it a point to know and follow the regulations for engaging with clients and their entities anywhere in the world.
One of the testaments to this fact is that we work and recruit internationally so we not only have the best people, we also make sure that we are able to connect to our clients at each level and location. The fact that we cover 8 languages across 7 nationalities means we are able to communicate with the people as if we are local. For our clients in the UK we have strategic partnerships in place with well-established companies to deliver the same excellence as anywhere else. Wherever you need us, we have you covered, following local laws in each location we work and travel to, taking that weight off the shoulders of our clients.
LeadingMile is an international boutique-consulting firm specializing in change for the wealth and asset management industry. We pride ourselves in investing heavily in our own employees, as well as technical innovations specifically designed for our markets and clients. But our commitments to clients go even further than that. We make sure we fit the right people with the right client and unburden our clients wherever we can. Want to find out more? Contact us!
https://ind.nl/Documents/Openbaar_register_Arbeid_Regulier_Kennismigranten.pdf : LeadingMile is a publicly registered referral company for foreign hires, officially acknowledged by the Dutch government
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