EU declared conspiracy to punish London’s metropolis will backfire as Brussels goes on collision course Metropolis & Financial system | Funds


Valdis Dombrovskis: Brexit will make companies leave London

Meanwhile, the digital tax proposed by Mr Dombrovskis would put the block on a collision course with the US – and the UK would be well advised to steer clear of similar proposals, said Pieter Cleppe, a research fellow with the Property Rights Alliance think tank. European Commission Vice President Mr Dombrovskis, a former Latvian Prime Minister, was awarded the bloc’s trading portfolio last week following the resignation of Irish Commissioner Phil Hogan in the wake of the “Golfgate” controversy.

Ignoring this also harms European industry as it would create more hurdles for them to get funding from London

Pieter Cleppe

Although he was officially only given the role temporarily until Ireland nominates his replacement for Mr Hogan, the appointment will have caused some turmoil in the light of Mr Dombrovskis’ previous comments on the city in London.

Mr Cleppe told “Dombrovskis warned against closing market access to the city.

“In general, it is damaging to European industry to ignore this as it would create more hurdles for them to get funding from London.”

Boris Johnson will have the last laugh when Michel Barnier tries to punish the city, said Mr Cleppe (Image: GETTY)

Valdis Dombrovskis

Valdis Dombrovskis is responsible for finance and – at the moment – trading (Image: GETTY)

On the subject of a digital tax, Mr Cleppe, who broadened his ideas in an article for The Critic website, added: “The EU move to tax digital services – and similar national taxes – not only threatens innovation, it does so Done put the EU on a collision course with other partners (US) as it changes the way companies are taxed: no longer just based on where they are headquartered, but based on where they make profits.

“Organization for Economic Cooperation and Development [OECD] Talks about it are going very badly.

“First, large US technology companies often pay more corporate tax than old European manufacturers who have learned to bypass high European corporate tax rates.”

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Tech giants like Apple could be hit by a digital tax (Image: GETTY)

In a message to Downing Street, Mr Cleppe added: “There have been rumors that the UK would be removing such a tax and I think that would be desirable as the UK should try to get a good trade deal with the US.

Last month, Dombrovskis suggested there was no guarantee that the UK would get quick access to EU markets after the end of the year.

He said: “In some areas we will not be able to make equivalency decisions.

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City of London

The City of London is one of the most important financial centers in the world (Image: GETTY)

Phil Hogan

EU Commissioner Phil Hogan resigned last month (Image: GETTY)

“Not all EU parameters are available in these areas.

“Implementing regulations are not yet in place.”

He also noted that the UK would have to negotiate individual agreements with member states on January 1st to gain access to mainland Europe, saying “UK investment firms can get this access through national regimes.”

David Frost Michel Barnier

UN negotiator David Frost and EU counterpart Michel Barnier (Image: GETTY)

Speaking last week on the subject of “Own Resources”, the process that generates the EU’s main revenue, Mr Dombrovskis said the EU should tax companies that generate income from digital services because the money is used to finance infrastructure and services Social programs will be needed in the future.

He added: “We have to deal with digital taxation and we have to do it preferably internationally as the digital economy in particular is quite globalized.

“As the digital economy increases, our tax revenues will also face a greater challenge in funding our infrastructure and social programs.”

Boris Johnson Donald Trump

Boris Johnson is hoping for a trade deal with the US, led by Donald Trump (Image: GETTY)

Ray Bassett, Ireland’s former ambassador to Canada, Jamaica and the Bahamas, said the proposed digital tax was also viewed with unease in Dublin.

He said: “If you give the EU the right to tax directly, you are well on your way to becoming a state.

“I assume that Martin, like all Irish politicians, would be against the EU taking control of the taxation of US digital media, as this would adversely affect the republic.

“I fear, however, that a weak Irish government and without the support of Great Britain could give way in Brussels.”