The decision of the British company Fintech Wise to move its list of main scholarships in the United States is the last of a series of blows on the London market – and a new provision acquired in an American tax bill could aggravate things. Article 899 of the President Donald Trump spending bill, which adopted the House of Representatives in May, threatens to penalize foreign companies domiciled in countries with “unfair foreign taxes” and experts say that this could accelerate the trend of European companies to hoist the pond. The provision introduces tax measures to reprisals against companies and other countries in countries with direct debits such as taxes from digital services and the world’s minimum tax rules of the OECD. The list of affected nations would include most of the European Union members, the United Kingdom, Canada, Australia and Switzerland, among others. For listed companies on the stock market, article 899 requires a new tax of retention of revenues of American origin for any foreign company which belongs to more than 50% by non -American entities. The tax would start at 5% and increase by five percentage points per year to reach a maximum of 20%, in addition to existing taxes, which vary according to countries and tax treaties. This could work the profits of companies in the Stoxx Europe 600 index, for example, up to 2% in the first year, and up to 5% over four years, according to Goldman Sachs analysts. How can European companies avoid article 899? The Wall Street Bank has identified US rehabilitation as one of the many measures that companies could take if the bill becomes a law. A list in the United States would provide a direct route to increase the company’s American investor base, according to Goldman. This would help companies push their non-American property below the critical threshold of 50%, by withdrawing them from the scope of article 899. Although there are many British companies with strong exposure to the United States with a shareholder base mainly from the United States, Goldman Sachs has identified the Consumer Credit Society Experian and Hikma Pharmaceuticals, among others, as two companies FTSE 100 companies With more than half of their group income in the United States, but by descending the 50% threshold for possession of the United States. The Wall Street Bank suggested that these companies could use an American list as an avenue to avoid taxes imposed by article 899. Tax experts have warned that to avoid the impact of article 899, this would require much more work than simply questioning in the United States with an attempt to win American shareholders. “I am not sure that registration alone is sufficient,” said a senior manager of a large European company with in-depth operations in the United States, which asked not to be appointed because they were not allowed to comment on the issue. “The language proposed (in the bill) includes a voting or value test for American property, including the companies listed on the stock market, and seems to say that if a company (falls under the tax on article 899) for even a day, it is for the year.” The executive also wondered if companies could identify beneficial owners – or real owners who control a business – “with any degree of confidence”. Indeed, the tax invoice includes “a concept of view” – which means that the American fund managers investing on behalf of foreign customers would not count for exemption requirements. “Surveillance (from the shareholder register) alone would be intensive to resources,” added the executive. Others point out that if European governments abandoned what Trump calls for their “unfair foreign tax” policies, their companies would automatically be exempt from 899. “The Hill Republicans see section 899 not as a measure of income, but as a tool that gives the Treasury Department a lever effect in negotiations with other countries to encourage changes in behavior,” Pat Brown A PWC PWC tax expert. “Companies whose headquarters are foreign considering changes in their capital structure to reduce the impact of article 899 should consider that the government of their country of origin could, with the blow of a pen, eliminate the need to consider article 899 as a problem,” added Brown. The bustle of a business migration trend, Goldman Sachs, also stressed that article 899 could also act as a powerful incentive to a business migration trend which is already underway. For years, European and British societies have felt disadvantaged by their original markets, a feeling that led to a constant flow of buyouts and overhaul elsewhere. Companies have repeatedly stressed the reduction in evaluation that European actions suffer from their American peers to justify their decisions to move their quotation to the United States made their debut on the London stock market in 2021 in a direct registration which estimated the company at 8 billion pounds Sterling (10.84 billion dollars) at the time. It is now estimated at 11.07 billion pounds sterling, according to LSEG data. Since then, London has been mired in doubts as to whether he can accommodate major technological lists. The market is often criticized for the lack of the depth of the liquidity and expertise of the investment analysts industry to adapt to these transactions. However, doubts about the London stock market has not been limited to technology. Last week, the metals investor supported by Glencore Cobalt Holdings announced that she had abandoned plans to make public in London. The IPO had to be the largest rating of the British capital since the beginning of 2024. A spokesperson for London Stock Exchange Group (LSEG) told CNBC last week that London remained the main European exchange in terms of raised capital and total market capitalization of the companies listed. They added that they had seen a “notable increase in the interest of international companies to come in London with a lot of time to prepare”. – Ryan Browne of CNBC contributed the reports.
Why article 899 of the US tax bill could push European companies to register in the United States
