Although saying that their tax position was only one factor in their decision, the life insurance company Zurich is planning to leave the UK for the lighter tax regime of Ireland.
They join a long list of companies doing the same thing. According to the Times they are such companies as Shire Pharmaceuticals, United Business Media, the marketing group WPP who have already moved and Diageo and Unilever who, amongst many other top 30 UK companies, have threatened the move.
Ireland has attracted many financial services companies across to them. The world’s third largest insurance broker, Willis, recently moved there from Bermuda.
The new coalition’s plans for a rise in capital gains tax may well have spooked many despite George Osborne’s signals that he will be lowering corporation tax in the near future. All of course not helped by the new 50% top rate in income tax.
Tax is of course only part of the picture. There is also the matter of where people are employed and where the profits are spent. Then there is the matter of whether companies selling into the UK but benefitting from lower taxes are operating unfairly. They do after all have the choice of either meeting the average market cost and pocketing the difference or undercutting the market to gain share.
But of course they cannot sell into the UK without some sort of sales arm, either direct or through intermediaries. Either way they will have to contribute to the UK’s tax take. Maybe this is one of the reasons behind the recent thoughts that the Treasury may increase the level of Insurance Premium Tax (IPT). There may even be scope for extending this tax from general insurance to life insurance.