A French Look At Brexit: Should They Stay Or Should They Go

Author:Ms Jessie Gaston

In an article published in Tax Notes International on May 23, Jessie Gaston discusses the potential tax and economic consequences for France if the United Kingdom leaves the European Union:

Next month, the British people will vote on whether they want to remain members of the European Union or exit from it. This event is now widely referred to as Brexit, similar to Grexit, which was heading the news in 2011 at the height of the Greek economic crisis. Brexit could potentially put an end to 43 years of treaties and protocols signed by the United Kingdom in matters as diverse as customs, bank regulations, immigration, and, of course, taxes.

Curiously enough, while the gravity of Brexit would have consequences throughout Europe and could even open the door to an exit from the EU by other countries, up until recently talk in Europe about the Brexit proposal was rather limited. In some circles one could hear phrases such as ''those Islanders are at it again,'' ''fighting to mark their difference and for their own sake instead of accepting to think as Europeans,'' and ''the U.K. is fighting against windmills,'' but no real mention of a doomsday scenario. (Prior analysis: Tax Notes Int'l, Mar. 14, 2016, p. 903.)

In contrast, Grexit, which would have pushed Greece from the eurozone based on its inability to regulate its monetary and tax systems and a soaring debt, generated impassioned press and analysis for months, predicting the end of the European Union as a whole if Greece were to step out of the common monetary system — these consequences, from a country that represents about 2 percent of the European GDP. Time will tell if there was a bit of an overdramatization.

As a French tax professional with numerous clients and transactions in and with the U.K., I regard the prospect of a Brexit as anything but an anecdotal event. But until recently, it seemed to me improbable. The roots of the crisis are based on European policy disagreements. Ever since the U.K. entered into the European Economic Community in 1973, it has constantly (and often with success) challenged European policy, always with the threat of leaving all or part of the EEC.

In February I traveled to London to visit clients and colleagues. I was surprised that the most recurrent topic of conversation was the realistic possibility of Brexit and the consequences it would have for the United Kingdom.

In London, I met with lawyers from several firms, a few bankers, and some listed and unlisted English companies with sizable cross-border business. They all mentioned that it was more likely than not that the U.K. would vote to leave the European Union. The dramatic economic consequences of that event were already being...

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