After the Brexit vote, we wrote that Britain now had the chance to become the “Island of Safety” for many global companies, away from the autocratic bureaucracy of the EU. That was totally contrary to the accepted wisdom that global companies would move out of London to somewhere on mainland Europe.
Now we hear that McDonalds has decided to move its European headquarters out of Luxembourg after the “tax harassment” from the EU government.
Here is an article from Mish Shedlock.
McDonald’s to Move European Base From Luxembourg to UK After EU Tax Harassment
Congratulation to McDonald’s. In the wake of ridiculous tax scrutiny by EU nannycrats, McDonald’s Announced it Would Move to UK.
McDonald’s Corp said on Thursday it would move its international tax base to the United Kingdom from Luxembourg after coming under increased scrutiny from European Union regulators over its tax arrangements in the small country.
McDonald’s said it would create a new international holding company domiciled in the UK that would receive the majority of royalties from licensing deals outside the United States.
“We are aligning our corporate structure with the way we do business, which is no longer in geographies, but in segments that group together countries with common market and growth characteristics,” McDonald’s said in a statement.
The move will also help to cut costs, McDonald’s said.
McDonald’s potentially faced an order from the bloc to pay back taxes of $500 million to Luxembourg, the Financial Times reported in September.
The company said in July it would create over 5,000 jobs in Britain by the end of 2017, in a sign of its commitment to the country after the vote on June 23 to leave the EU.
A number of international companies have shifted their corporate registration or primary tax residence to the UK since Britain relaxed its rules on the taxation of companies’ foreign subsidiaries in 2012.
These include U.S. drug-maker Allegion, U.S. insurer Aon, and Italian tractor maker CNH Industrial.
As I said on day 1 of Brexit, the UK should lower its tax rate, to 10%, undercutting even Ireland.
The UK only went to 10%. The more, the EU threatens to punish the UK, the lower it should drop the rate.
But to hell with all the games. As I said on December 2, Brexit is a Religious Battle (And You Can’t Negotiate Religion).
In light of various religious battles that cannot possibly be won, “Just Leave” makes perfect sense. There is no legal reason to file Article 50. The UK should just leave and be done with it.
Otherwise, the EU will drag this mess out for years, demanding payment the entire time, using the European Court of Justice as the arbiter in any dispute.
We agree with Mish. Just leave and let the EU stew in its own mess. All the EU wants from Britain is a continuing payment of around €13 billion per year.
With a 10% corporate tax rate, Britain is so much more lucrative than Switzerland or Ireland. Trump should consider doing the same. Foreign companies would rush to move their companies to the US. Then we would genuinely have labor shortages unless the robots get smarter.