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Will Brexit be taxing for recruiters and clients?

ITS International has highlighted some of the challenges for recruiters and their clients if the UK decides to leave the UK.

 

It states that taxation in the UK has been substantially shaped and styled by EU legislation and regulation. Therefore, the company claims, although Brexit will restore the UK’s autonomy over tax-setting, its commercial access to the EU could be impeded by additional taxes, such as import duties, imposed by Member States.

 

ITS states that Brexit would not impact on the UK’s extensive network of Double Tax Treaties, which are not based on membership of the EU.

 

The UK is a member of global organisations such as the OECD, G20 and WTO as well as a party to many other bilateral tax treaties. All of these, the company says, will continue limiting the UK’s ability to establish a fully personalised tax policy whether the country votes to Remain or Brexit.

 

VAT is a European tax regularised across the EU to facilitate European trade. In preference to the prospect of registering for VAT in up to 28 Member States, UK businesses will want a common protocol for reclaiming VAT, according to ITS International.

 

Brexit will terminate the UK’s obligations and rights embedded in its membership of the EU, the company says. This legislation has evolved over many years with the aim of reducing the direct tax burden for businesses trading across the single market. Remaining sympathetic to those aims, the UK is likely to want those ‘Directives’ to remain in place post-Brexit.

 

As UK tax rules post-Brexit begin to deviate from EU tax rules, ITS believes companies having a physical presence in both jurisdictions will have to deal with cross-border corporate taxation more complicated and onerous than it is now. It will be in the UK’s interest to achieve minimal divergence from EU law to ensure the country remains attractive to inward investors and maintains a strong leverage in negotiations with the single market.

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