German and French efforts to lure U.K.-based banks unsettled by Brexit may stumble over an obstacle of their own making — a planned tax on financial transactions.
Finance ministers from 10 European Union countries, including Germany’s Wolfgang Schaeuble and France’s Michel Sapin, plan to convene this month to discuss the tax. Along with the familiar issues they’ve been struggling with for more than five years, they must now factor in how the tax might damage their appeal to banks seeking to relocate from London.
A decision to impose the tax could benefit Ireland and Luxembourg, which have also actively courted the big banks and are not part of the group pursuing the tax.
“Germany and France are expending quite a lot of effort trying to entice financial services to Frankfurt and Paris, including derivatives desks,” said Dan Neidle, a partner at Clifford Chance in London. “This isn’t going to work if the financial transaction tax is introduced by Germany and France.”
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