Whether it‚Äôs a hard or soft Brexit the thumping parimentary majority this week will inevitably mean that there are some tough decisions to be made quite soon in the City. When Teresa May triggers Article 50 and serves notice on Britain leaving the European Union there will be significant fall out, not least of which will be notice served on the current EU Finance Passporting arrangements.
Under current legislation, as Britain is a member of the EU, any Finance firm licenced in the UK can trade across The European Economic Area without worrying about cross border tariffs or restrictions. When we leave the EU then that freedom will be removed.
The obvious solution and one used recently by some of the larger firms as a threat to the British Government, is that they would look to relocate their Head Office to somewhere else within the EU, leaving the City of London.
On the face of it this would seem to be a plausible solution but it hides a number of issues. Not only is there the issue of staff relocation and the upheaval of moving (and we know how distressing that is when you only move house, never mind and entire business!) but there is the lack of guarantees that wherever you relocate to will also remain within the EU.
In fact, with the lack of guarantees around any of this and the sheer problem of uprooting the existing infrastructure of your business, firms are looking around for a better solution.
One suggestion gaining a great deal of traction is to have a ‚Äôsatellite‚Äô office somewhere else within the EU from which you can hold your Passporting rights.
This has a number of advantages, not least of which that you don‚Äôt actually have to move your UK based operation. All activity is done under the Passporting Licence which you hold even though the actual work is being done in one or more locations.
There are of course obvious locations such as Frankfurt, Paris, Luxembourg, Ireland or Gibralter. But all of them come with problems, not least of which is the language barrier. Despite the benefits of the EU we have never really overcome the language issue and particularly in the UK, most people simply don‚Äôt speak more than one language fluently.
Enter Malta. Part of the Commonwealth with long rich cultural and financial ties to the UK, the island is ideally placed to help Finance companies gain and meet their EU Licence requirements. With English recognised as one of two languages widely spoken on the island and a flight time to get there of just three and a half hours, it makes perfect sense to set up a satellite office on the island.
Malta prides itself on having a flexible legal and regulatory regime, so gaining a License from our commonwealth partner will be a straightforward process.
With it‚Äôs competitive tax regime ‚Äì Malta is fast becoming the ‚Äògo to‚Äô post Brexit regulatory judisdiction of choice.
The Maltese Government are keen to support firms wishing to do this and being a small island they welcome the fact that firms may wish to keep their operations elsewhere, just setting up a small satellite on the island. With a relatively small business district in Valetta it is unlikely that anything that required massive infrastructure changes and building would be welcome, but setting up your satellite office makes perfect sense.
Sure, there are other European countries such as Gibraltar who would claim that they can provide this service, but with Malta‚Äôs ties to the UK and the fact they even drive on the left, what‚Äôs not to like?
Firms wishing to explore this further please contact me .¬† It would be good to start the conversation‚Ä¶
We‚Äôve extensive experience in this area and can help you ensure a smooth transition to your new post Brexit financial environment.