Since 2010, the Global Law Experts annual awards have been celebrating excellence, innovation and performance across the legal communities from around the world.
posted 5 years ago
Uncertainty is the
worst for markets and the economy. Brexit has been keeping EU member states in
permanent tension for more than 2.5 years, causing concern all over the world.
In the UK, financial systems such as ePayments, Binderlings, TransferWise,
Neteller and the world-famous online banks Revolut and Monzo received financial
licenses. How Brexit may affect the ability to continue cross-border activities
and whether obtaining payment licenses in the UK will result a collapse of the
business – let’s figure it out in our artecle.
From the general to the particular: the impact
of Brexit on the global economy and selected British companies
If we consider this
issue globally, the consequences of hard brexit, affecting the UK as the fifth
largest economy in the world, will affect the world as a whole. In the
authoritative edition of The Guardian they pointed out the opinion that the
Brexit process revealingly demonstrates the risks associated with political and
economic fragmentation, and their impact on the global economy. It creates
conditions for reducing the efficiency of economic interaction, reducing the
stability and complicating cross-border financial flows, which acquire much
less maneuverability. The Wall Street Journal holds the same point of view.
However, if we consider the particulars, then the opinions of experts regarding
companies that have received PSP and EMI payment licenses in the UK are
divided. Some predict difficulties that in the worst case may force them to
leave the UK market, while others believe that there is nothing to worry about,
and even if the Brexit process is completed under the «no-deal» scenario, the
conditions for such companies will not change too drastically.
Vector of change
According to experts,
agreements of companies signed with the British side, including loans,
financial transactions and agreements within the framework of UK legislation,
in most cases will not undergo any changes. However, they can touch upon issues
of taxation, logistics and customs duties, restrictions on digital content in
the EU, the supply of goods from and to the territory of the European Union and
other similar “pitfalls”. But how exactly, it will be clear only after a
prolonged outcome. As for the long-term effects on the market of government
bonds, their popularity on an international scale cannot be overestimated,
which means that any fluctuations will have consequences throughout the world.
But nevertheless, considering the initial fall and the subsequent rebound of
European stocks, the scenario where a situation in the market will stabilize is
possible.
Potential increase in tax burden for business
If the opinions of
experts differ on the issue of global consequences of Brexit, then they agree
on taxes as the overwhelming majority predict an increase in the tax burden for
business. One of the likely scenarios will be the use of a popular and
well-established scheme, especially often introduced during the crisis period —
an increase in old taxes and the introduction of new ones. In the current
uncertainty, the question of VAT remains open. It is not clear whether Foggy
Albion will decide to come up with its own tax structure or leave the existing
one, but for the business, the second option would definitely be more convenient.
Optimistic conditions for companies with a
British PSP license
The British regulator
FCA usually does not consider the PSP within the framework of the UK payment
rules, if the specifics of their activities involves the provision of Internet
and other services to customers from the UK and beyond, and can be regarded as
providing cross-border services outside the jurisdiction of the UK supervisory
authorities. In case of FCA does not make any changes to this policy, which so
far seemes very likely, the PSP will not be required to obtain permits in the
UK to continue its operations after Brexit. This way the creation of payment
systems and obtaining licenses in the UK continues to be a profitable option
even in the light of various scenarios of country exiting the EU.
Is it worth it: do you need a company in the
UK?
Despite the current
uncertainty, establishing or maintening a company in the UK is still a
profitable venture. And although it is likely that in the coming years, the
cost of servicing a business may increase, yet having an active business in the
UK will become even more respectable than before. In addition, for any company,
the brief mention that it remained on the market during the Brexit period and
successfully survived it will be a significant plus to the reputation on the
market. Nevertheless, the owners or those who are just planning to create a business
in the United Kingdom, should carefully think about all possible costs, burdens
and risks – this should be a determining factor in making the final decision.
posted 2 days ago
posted 2 days ago
posted 3 days ago
posted 4 days ago
No results available
ResetSign up for the latest advisory briefings and news within Global Advisory Experts’ community, as well as a whole host of features, editorial and conference updates direct to your email inbox.
Naturally you can unsubscribe at any time.
Global Advisory Experts is dedicated to providing exceptional advisory services to clients around the world. With a vast network of highly skilled and experienced advisers, we are committed to delivering innovative and tailored solutions to meet the diverse needs of our clients in various jurisdictions.