Loophole Helps London Remain Financial Center
LONDON -- To understand how Britain's financial district, the City of London, has attracted so many European headquarters of international banks, check out a 200-year-old loophole in the British tax code.
It allows foreign bankers in the United Kingdom who work for a non-British company to pay much less in taxes than the vast majority of Britons and their counterparts elsewhere in Europe. U.S. bankers generally aren't among them; they usually can't take advantage of the tax provision because the U.S. taxes earnings regardless of where they are made or where the earner lives.
While the loophole is little known outside elite business circles, tax authorities here have been examining it lately. It remains intact largely because of the role it is believed to play in maintaining London's pre-eminence in European finance against challenges from, in particular, Frankfurt, home of the European Central Bank.
Take Spanish banker Claudio Aguirre, the former head of investment banking for Merrill Lynch & Co. for Europe, the Middle East and Africa. For more than a decade until he left last year, Mr. Aguirre used London as his base while he spent at least 30% of his time working elsewhere. In some years he would make $3 million (�2.5 million), according to people familiar with the matter. Tax on that could theoretically have been charged at 40%, Britain's standard rate.
But Merrill Lynch employed him on what is known as a "dual contract," meaning he had two separate employment agreements with Merrill. As a result, Merrill sent compensation for the 30% of his time that he spent elsewhere to an offshore account, and that wasn't taxed. The rest of his compensation was taxed at the standard rate. By hiving off 30%, or $900,000, the banker would have paid an overall tax rate of 28%, a savings of as much as $360,000 a year. The loophole can cover as much as 50% of a banker's pay.
There are no clear numbers on how many expatriates benefit. But bankers, accountants and human-resources executives put it in the range of at least several hundred across the city, as banks including Goldman Sachs Group Inc., Morgan Stanley and BNP Paribas SA also provide dual contracts for some of their non-British bankers. Accounting firm KPMG estimates that just under 10% of expatriates in the city receive some type of tax relief. Officials at all the banks declined to comment.
The tax loophole dates to the 1800s, when people would leave the country on ships for years. Because the law requires the duties in the two employment contracts to be "made distinct," says Rob Gell, a senior tax manager at Ernst & Young in London, its application is increasingly difficult today with modern communications. "If a European client calls you on our cellphone or e-mails you in London and asks for advice, what are you going to say? 'Wait until I am in Calais and I'll call you back'?"
税法漏洞帮助伦敦确立金融中心地位
要了解伦敦是如何吸引众多欧洲银行在此设立总部，成为金融中心的，看一看已有200年悠久历史的英国税则中的漏洞就知道了。
外国银行如果为非英国公司服务，那么它需要缴纳的税金就会比英国和欧洲其他地区的同行缴纳的税金少得多。美国银行通常不再此列，因为美国征税不考虑应税所得来自何方，也不考虑应税公司地处何方。
这个漏洞在商业经营圈外鲜为人知，但英国税收机关最近一直在审核税法。但相关条款大体未改，因为据信这些税则使伦敦在其他城市崛起为欧洲金融中心的挑战中确保了难以动摇的稳固地位。欧洲央行(European Central Bank)所在地法兰克福正是挑战者之一。
以西班牙银行家克劳迪奥?阿吉雷(Claudio Aguirre)为例，他是美林(Merrill Lynch & Co.)旗下欧洲、中东和非洲区投资银行部门的前任主管。他在美林服务了十多年，在去年离职前一直以伦敦为主要办公地点，在其他地点办公的时间至少是30%。据知情人士称，某些年他至少收入300万美元，理论上应按照40%的英国税率纳税。
但美林和他签有两份雇佣合同，将他在外地办公相应的30%薪酬汇往一个海外帐户，不纳税。其余才按照英国税率纳税。扣除这30%，也就是90万美元之后，他的整体应税率是28%。如此算了，他每年省下了至多36万美元。这个税则漏洞能为一位银行家省下的薪酬比例可以高达50%。
到底有多少海外员工因此受益不得而知。但伦敦城内的银行家、会计师和人力资源高级管理人士少说也有数百名。包括高盛(Goldman Sachs Group Inc.)，摩根士丹利( Morgan Stanley)和法国巴黎银行(BNP Paribas SA)在内的许多银行都与各自的部分非英国籍银行家签署双份合约。毕马威会计事务所(KPMG)估计全城只有不到10%的海外专家能得到部分税收优惠。各家银行的管理人士均拒绝就此发表评论。
这项税法漏洞可以追溯到十九世纪，那时人们乘船离开英国可能会长达数年。安永会计师事务所(Ernst & Young)驻伦敦的高级税务经理罗布?盖尔(Rob Gell)说，因为法律要求两份雇佣合同必须“截然不同”，这在现代社会中越来越难以遵循了。“如果你在伦敦，而你的某位欧洲客户用手机或者电子邮件向你咨询，你怎么答复？”盖尔问道，“等我到了加来再给你回电话？”
