Over 5,000 finance professionals have relocated to Paris from London as a direct result of Brexit, according to thinktank, Europlace. This includes 3,500 people employed directly in financial services and a further 1,500 in auxiliary sectors like consultancy and fintech. Perhaps not particularly surprising given that in 2018 40% of firms said their post-Brexit hub would be Paris, including large US bulge bracket banks such as JPMorgan, Bank of America, and Goldman Sachs. The interesting question for us to consider at Dartmouth – how is this changing the job scape in Paris for French (and non-French) nationals who want to capitalise on this growth?
International financial interest in Paris has been developing gradually in the background – direct investment in the financial sector grew by 14% between 2018-2019, compared to a decline of 29% in Greater London. Ongoing Brexit uncertainty proved unattractive for a similar level of direct investment in London1.
Almost five years since the June 2016 referendum announcement, the financial agreement is still not fully defined. However, rather than wait passively for an answer ahead of the January 1st 2021 deadline, many firmsstarted making their own plans as early as 2017. Bank of America bought their newly refurbished Parisian office then, which opened in 2019. Situated in the eighth arrondissement with an atrium and 800 sq m of terraces including a roof garden, the office is a clear indication of their ambition to gain market share in France and do so in style.
I am one of the individuals capitalising on the financial services expansion and took a new role to build Dartmouth’s growth of private equity coverage in France. My time working in the French market has already proven that it’s becoming more established – every week there are new teams hiring, expanding their resource or opening new space for movement of the team. Citadel, one of the largest hedge funds in the world, is the latest global player to gain the regulatory green light and consecrate their desire to expand beyond the highly competitive US market to continental Europe. Other firms include private equity powerhouse EQT, the boutique firm Perwyn, and of course BlackRock (already with an established base but benefitting from investment into hiring and resourcing in Paris).
What are the benefits?
Post Brexit, the French authorities have strived to present Paris as an attractive prospect for UK based financiers in order to secure jobs and boost investment in the local economy. In 2019, positive changes were made to private equity employees’ taxation rates on carried interest for any fund relocating to France. The amendment cut the tax rate from 75% to 30% on whatever profits private equity fund managers generate2. It was a welcome change to complicated pre-existing rules that prevented fund managers from lower taxation rates unless they met specific criteria.
In addition to business incentives, there is the French Inpatriate Tax Regime to benefit from – to qualify you mustn’t have paid French income tax for five years prior to relocation and will benefit from reduced income tax rate (25-30% in some cases) for eight years while residing in France. There is also up to 50% reduced tax on certain foreign sources of investment income3. With relocation looking so attractive, what are the practicalities involvedpost-Brexit and how interchangeable are the UK and French job markets?
(Re)location, (re)location, (re)location
It’s no secret that the big banks provide an enticing relocation package and offer plenty in terms of support;by providing moving companies and relocation agents to help with the move. Administratively, they help with your residence paperwork, health insurance, and advice on your personal tax implications. I am sure this differs greatly by employer but all those in the sector I’ve met personally since their relocation have recounted similar positive anecdotes. Furthermore, clients looking to hire new talent make it clear that they are happy to support non-French nationals in relocation and will aim to make the transition as smooth as possible.
Savvy firms that made their move pre-Brexit deadline of 31st Dec 2020 means employees are entitled to de-facto French residence and only need to apply for their ‘carte residence’ by July 2021. After the deadline, individuals can’t benefit from the withdrawal agreement and must apply for a ‘Long Stay Visa’ (over 90 days) including for work, extended travel or just family visits to French nationals4. Whilst initial confusion about settlement rights was widespread, the good news is things have only become clearer with time as a government framework emerges and the expat community shares war-stories and solutions about their own experiences.
Le ‘vrai’ Paris
What I love about Paris is that regardless of the clear ‘push’ to become an international hub and attract foreign investment and talent – the city hasn’t lost its unique culture. Every day I’m pleasantly surprised by exchanges with locals who guard the culture proudly and aim to educate newcomers on the hidden beauties of the city. Given the initial feeling that government measures favouring foreign companies and concerns this might mean neglect for local business needs, there appears to be zero sign of tensions in my eyes. London still remains Europe’s leading financial hub, but the gap is closing and there is certainly un bon appétit for expansion into the French market with a suite of opportunities presenting themselves.
If you’re interested in finding out more about a potential move to the French capital or to hear about some of the exciting opportunities we’re currently working ont, please reach out to me, I’d love to hear from you.
1. Brexit: Why the exodus to Paris has not (yet?) come to pass: https://www.marketscreener.com/quote/currency/EURO-BRITISH-POUND-EUR-4593/news/Brexit-Why-the-exodus-to-Paris-has-not-yet-come-to-pass-32386606/
2. French Taxation of Carried Interest: A New Opportunity for Foreign Fund Managers: https://www.dechert.com/knowledge/onpoint/2018/12/french-taxation-of-carried-interest–a-new-opportunity-for-forei.html
3. Living in France, Gov.UK: https://www.gov.uk/guidance/living-in-france#working-and-studying-in-france
4. France in the UK, Consulate General of France in London: https://uk.ambafrance.org/BREXIT-all-visa-related-provisions#WHAT-WILL-CHANGE-ON-THE-1ST-OF-JANUARY-2021