EFFECTS OF BREXIT

Spain tries to attract London banks with income tax incentives

Madrid joins list of European cities vying to host some of the City’s lenders in the post-Brexit world

Spain is preparing a list of advantageous conditions to attract London-based banks looking to relocate after Britain leaves the European Union. These incentives could include income tax incentives for non-residents. Madrid has put together a task force comprising members of the Bank of Spain, the CNMV securities watchdog and the Economy Ministry. Their mission is to attract financial institutions wishing to move to a EU member state after Brexit becomes effective.

Economy Minister Luis de Guindos (l) wants to attract City lenders to Spain.
Economy Minister Luis de Guindos (l) wants to attract City lenders to Spain.Jaime Villanueva

The group is working to activate “a complete package of measures with the goal of attracting to Spain those UK-based financial institutions wishing to transfer part of their business to Spain as a result of Brexit,” said the CNMV in a release.

So far, the Spanish executive has been in touch with several US and Japanese lenders.

Goldman Sachs, JP Morgan, Nomura and other investment banks have been weighing their options

But Madrid is not the only European city to flirt with the City’s bankers: Dublin, Amsterdam, Frankfurt and Milan are all vying for their favors. Even Luxembourg, Bratislava and La Valeta in Malta have shown an interest in attracting the City’s future financial diaspora.

In Spain, besides the tax incentives, relocating lenders would be offered more streamlined dealings with the CNMV.

Despite reticence from the Treasury Ministry, the economy minister wants to offer foreign bank executives tax incentives, mirroring steps announced by France a few weeks ago.

The French strategy has already yielded results: HSBC said it will transfer around 1,000 employees, representing 20% of its London staff, to Paris.

HSBC said it will transfer 20% of its London workforce to Paris because of its incentives.
HSBC said it will transfer 20% of its London workforce to Paris because of its incentives.AFP

Goldman Sachs, JP Morgan, Nomura and other investment banks have been weighing their options for months, preparing for the possibility of a “hard Brexit” that would deny British lenders easy access to the European single market.

“The advantages of Spain are its infrastructure, attractive real estate conditions and recent regulatory changes to achieve a more agile CNMV, which is banking’s great concern,” said sources at the Economy Ministry. “Besides that, there is a tax regime in line with other countries, to which a touch-up to income tax will be added in order to make it more attractive.”

English version by Susana Urra.

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