Low taxes to encourage jobs transfer

One UK-based tax lawyer predicts banks in the City of London will shift some of their operations to Dublin in an effort to capitalize on the country's low corporate tax rates.

"A number of investment banks are looking at moving businesses to Ireland," Alastair Wilson of law firm McDermott Will & Emery tells eFinancialCareers.ie. "There's a large differential between corporation tax rates, with Dublin at 12.5% and London at 30%. It's inconceivable that banks won't want to exploit that."

A recent report by International Financial Services, London (IFSL) reported in the UK's Guardian newspaper, suggested the UK's financial services sector generated 8bn in corporate tax receipts in 2005, 25% of the total.

If Wilson is right, this figure will diminish and Dublin will see a spate of new financial services jobs. "The financial services industry is a lot more mobile than it used to be", he says. "You need people structuring derivatives and sitting on computerized trading floors - that could be done almost anywhere."

Last month the European Court of Justice ruled that Cadbury Schweppes was within its rights to place subsidiaries in low-tax European countries as long as they carried out genuine economic activity. The ruling has made it possible for companies, banks included, to transfer activities to low taxation countries without invoking the wrath of the taxman.