France to ease finance, tax rules to attract Brexit bankers

PARIS (Reuters) - France will pare back financial regulations to EU minimums and introduce new tax incentives to make Paris a more attractive finance hub, Prime Minister Edouard Philippe said on Wednesday.

People walk on the esplanade of La Defense in the financial and business district of La Defense, west of Paris, France March 26, 2018. REUTERS/Gonzalo Fuentes

Speaking to a reception for 200 finance executives, Philippe said most of the changes would be made by the end of the year, as countries across the EU battle to attract bankers from London amid uncertainty over the impact of Brexit on the region’s biggest financial centre.

For asset managers coming to France, they will be able to have capital income known as carried interest taxed at 30 percent rather than higher income tax rates.

The country will also make it possible to amortise goodwill, as in Germany, as part of a longer term European project to harmonise regulations for calculating corporate tax.

“A financial centre is built with patience, by being consistent. I want this consistency to be the trademark of our economic strategy and our attractiveness policy,” Philippe said in a speech.

The moves add to steps already taken by President Emmanuel Macron aimed at boosting Paris as a financial centre, such as plans to gradually cut corporate tax to 25 percent and scrapping a wealth tax on financial assets.

Macron’s government has also set a flat tax of 30 percent on all capital income and removed the top marginal band of payroll tax, although the moves have led to criticism of Macron as being a president for the rich.

Paris is competing with the likes of Frankfurt, Dublin and Luxembourg to win over finance jobs in the wake of Britain’s departure from the EU next March.

The Paris Europlace financial sector lobby said on Wednesday Paris was set to win 3,500 financial sector jobs leaving Britain due to Brexit.

HSBC HSBA.L would make up the bulk, with 1,000 jobs, while French banks moving posts back to their base in Paris would add another 1,000 jobs, and the rest would come from a host of Wall Street banks and other financial firms.

Bank of America Merrill Lynch BAC.N, JPMorgan JPM.N, Citigroup C.N, Morgan Stanley MS.N, Goldman Sachs GS.N, Standard Chartered STAN.L and Wells Fargo WFC.N have all made "announcements in favour of Paris", Paris Europlace said.

Reporting by Jean-Baptiste Vey; Additional reporting and writing by Leigh Thomas; Editing by Michel Rose and Mark Potter