The aftermath of Brexit has sent American financial firms lurching to the exits of the United Kingdom only to stop, rethink, dawdle, and then inch even closer to the door.
Basically, Brexit is a fire that might never go out because it might have never have been lit. What we do know is that things are going to change bigly in the British economy and that has a lot of people worried about making Jolly Ol' England its base of European operations. But there is apparently one major US company so pro-Brexit that it's super-sizing its commitment to the UK.
McDonald’s Corp. shrugged off Brexit by announcing plans to switch its non-U.S. tax base to the U.K., ditching tiny Luxembourg where its fiscal arrangements are under attack from European Union regulators.
In an apparent vote of confidence in the U.K., the hamburger giant said Thursday it’s creating a new international holding company based in Britain, which decided in June to quit the EU. The new company will be responsible for most of the royalties received from licensing McDonald’s intellectual property rights outside the U.S. It will pay U.K. corporation tax, according to an e-mailed statement.
McDonald's is clearly hoping that Britain will be the next hot European tax shelter, and that it will be able to wriggle free of the Luxembourg probe while also becoming a pioneering member of pro- New British economy club.
“The reasons for changing the location of the corporate structure to the U.K. were sound before Brexit and remain so beyond it,” the company said. “These strengths are unlikely to change as the U.K. negotiates leaving the European Union.” The Big Mac maker cited the “significant number of staff based in London working on our international business, language, and connections to other markets.”
Here's the thing though, based on staffing, language and a corporate tax rate set to drop like a lead zeppelin from an already meager 20%; McDonald's is making a pithy pick by putting down stakes in Britain. But if one of the criteria is "connections to other markets" ie slinging out Quarter Pounders from London to the European Union, it's a little more curious. If Britain does leave Europe this summer, McDonald's would perhaps have to find a new base for European operations should it want one actually in Europe.
But we get McDonald's predicament. If only there was an English-speaking country firmly committed to Europe with a notoriously pro-corporate tax policy and an ancient tribal relationship with the prefix "Mc."
Yeah, we're stumped too...