BREXIT: Likely effect on wealth management industry

Thursday, 23 June 2016

At a media briefing on 21 June, Jean-Marc Tirard TEP and Simon Gibb of McDermott Will & Emery spoke of the possible impact on the wealth management sector of a Brexit vote today.

The result of the vote will be of particular importance to non-domiciled persons: living in the UK is attractive due to, among other reasons, the cultural opportunities and tax advantages it offers.

While some persons are doing contingency planning (like acquiring citizenship of other countries) ahead of the vote, non-doms based in London would be well advised to wait until the terms of the exit are clear. 'Direct taxation is controlled by each country. In the UK, the tax treatment of individuals will be governed by UK law and a Brexit vote is unlikely to affect existing tax rules', they said.

With regard to succession, the UK and Ireland did not sign up to the EU Succession Regulation which came into force in August 2015, and therefore a 'Brexit' would not affect succession rules in the UK.

It is also certain that the UK will continue to cooperate with international transparency initiatives like the Common Reporting Standard (CRS). The CRS is an OECD initiative which the UK has staunchly supported and will, in all likelihood, continue to support.

'We enter the territory of speculation', they said however, when considering the UK's CDOTs and in particular the registers of beneficial interest in trusts. Most CDOTS have created or will create registers of beneficial ownership – although there are differences with regard to their being centralised or made available to the public.

'If the UK is no longer part of the EU it will no longer be present to advocate for the adequacy of CDOTs' chosen regulatory framework when shaping the EU's approach to tax transparency and cooperation. It is also unclear how the EU will treat the UK and the CDOTs following a Brexit.' However, any changes to UK legislation would take at least two years to come into effect and they advise that taking immediate action would be premature.

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