In the wake of Brexit, many are questioning whether London will retain its title as the ‘Global Capital of the World’. Oury opens Clark’s eyes to how well London compares against other cities around the globe.
Why London?
Posted on: 13 Sep, 16
In the wake of Brexit, many are questioning whether London will retain its title as the ‘Global Capital of the World’. In this week’s blog, Oury opens Clark’s eyes to how well London compares against other cities around the globe.
Come on Clark, London is our home, of course it’s the most important city in Europe! A multi-cultural melting pot filled with brilliant restaurants, buzzing night life, a plethora of parks, more shops than you’ll ever need... and a 24/7 tube service to take you home at night!
Yeah, I know that. I actually meant in relation to whether companies should still set up their headquarters here or should they go elsewhere in Europe in the wake of Brexit?
The curious thing about this whole situation is, the most important benefit for setting up in London was not that it provided a stepping stone to Europe, but that it’s a global hub.
I’m not sure I follow...
OK. I’ll explain. If you are setting up a global business with the potential to trade across the globe, you have to ask yourself:
"Where should I put my Holding company? “
"Where should I put my IP?“
For a business with global aspirations, the competitors to London are not, Berlin or Paris, nor are they New York or Sydney really (with the greatest respect to those fabulous towns), but the real alternatives for businesses are Singapore, San Francisco or Hong Kong.
Are you saying there are no European cities that compete with London in this respect?
Hmm, yeah, actually no, let’s give credit where it’s due, Dublin competes.
Got it
Quite frankly, you’d be insane from a tax point of view to put your holding company in America (with its very high corporate taxes, and compliance requirements - sorry San Francisco), or India, Australia, or Japan… or anywhere else really.
Doesn’t Dublin or places like the British Virgin Island offer tax advantages? Mind you, the “Panama Papers” episode really seems to have caused a ground swell with respect to public opinion on tax havens… and come to think of it, firms really need to start taking a moral view on tax havens.
So true Clark….you know the real reason Amazon and Google set up in Ireland with a funky structure, was that it allowed them to massively reduce their tax. But, it wasn’t to avoid tax in Europe - it was to avoid it in the US!
It’s funny isn’t it, if you spoke to the man on the street, he’d say that European tax avoidance was exactly why they did it.
Ah, but that’s the media for you…and that’s a topic for another day! You know, being somewhere like the BVI and having your holding company there doesn’t help you raise finance either.
You need to pick somewhere really stable to set up, and respected in terms of business ethics.
Really when you consider international structuring, building a brand, and being in the right place with the right access to cutting edge thought, you wouldn’t consider any of these places.
So, where would you consider setting up a global HQ Oury?
London of course! You would be stuck to find another global city with the balance London offers… Actually what is unusual about it is in most countries the different ecosystems are in different cities. But London is the centre of the UK’s political, economic, and cultural systems. Not like America where it is split between numerous cities. It has the largest tax treaty network, the lowest rate of corporation tax in the G8, really I could go on for hours about why it makes sense.
Of course, that makes sense. If you had to do a check list of important things for international businesses, London’s top of the list.
It sure is, the list would go something like this:
- Access to capital
- Efficient Taxation
- Access to talent (with plenty of skills and attractive as a place to live)
- Time zone balance
- Weather even!?
Weather? Are you sure Oury?
Yes, I’m quite sure Clark.
Set-up in Singapore and you’ll be doing business in the sweltering heat, the same goes for Hong Kong. London has less rain than Rome, and is warmer in the winter than Amsterdam, Paris, Brussels or Milan and the reality is – it has a very pleasant, mild climate. Sure people would like it warmer… but it’s never too hot, and it’s never too cold, and it’s an industrious place as a result.
We’d all love to live on our own desert island, or in southern Italy… but they’re not logical places to build an international structure. There are so many restrictions in territories that people refer to as “Paradise” in in terms of the free flow of monies in and out, structure and there’s often issues with government corruption meaning the idea is often better than the reality.
- Lowest corporation tax in the G8
- Large tax treaty network
- Wide pool of talent from across the globe
- Working day overlaps with most time zones
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We are but two fictitious characters throwing out ideas and comment to stimulate debate and collect information. As professional service firms, we are open minded people and think independent thought and debate is essential to help understand, as well as navigate, complex problems. By joves – doing business across Europe (and the world) is set to become a whole lot more complex in light of recent seismic political events. As businesses - we provide information and hopefully some wisdom - and we see this blog and its caricatures merely as a much more fun, perhaps slightly controversial way, of stimulating debate and collecting ideas. We’re searching for some true pearls of wisdom, and as we find them, we’ll share them with you.
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Oury, I hear that some people are starting to question whether London will continue to be the most important city in Europe