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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
With you todayTim Sarson
Partner, KPMG in the UK
E-mail: [email protected]
Tel: +44 20 7694 4831
Soffía Eydís Björgvinsdóttir
Head of Tax and Legal, KPMG Iceland
E-mail: [email protected]
Tel: +354 545 6089
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
AgendaIntroduction
The impact on business
Optimising your position
Wrap up and questions
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
Brexit: The background
— Immediate change in Prime Minister and many
senior Cabinet members (July 2016)
— General Election to be held on 8 June 2017
— Announcement of the “Great Repeal Bill” to end the
primacy of EU law in the UK
— Article 50 invoked on 29 March 2017
— Full details of the Brexit model will not be known
until exit negotiations with the EU take place, but
we do know:
— UK will not seek membership of the Single
Market;
— UK will seek a mutually beneficial new customs
arrangement.
— To date, the financial impact of Brexit has been less
severe than feared
Developments
since 23 June 2016:
Why?
— Immigration
— Cost of EU Membership – £8.5 billion net
contribution p.a.
— (Perceived) loss of control
The result: The UK voted
to leave the EU by 52%
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
The UK’s current position in Europe
Source: Financial Times
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
Iceland’s place in Europe
- EFTA
- EEA
- Schengen
- Single Market (but agriculture and
fisheries excluded)
A member of:
- EU
- Eurozone
- Customs Union
Outside of:
Overall a strong relationship with the EU
Relationship with the UK (including Scotland)
The bigger picture:
- Geopolitical events
- Relationships with the wider world, including trade links
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
The starting position
Ma
rketa
ccess
and
inte
gra
tion
with
EU
National sovereignty
EU
membership EEA
membershipEFTA
membership
Customs union
Bilateral agreement
WTO
Immediately after the Referendum Result, the focus was on existing precedent models:
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
Now the Brexit lexicon has changed
June 2016
Sept 2016
January 2017
March 2017
?
The result. A
surprise for
many
Conservative
party
conference
Lancaster
House
speech and
White Paper
Invocation
Precedent
models
Norway,
Switzerland,
Turkey, Canada
How do you
like your
Brexit?
Hard, soft,
Goldilocks,
Red white
and blue
Deal or no
deal?
UK’s 12
objectives
Cliff-edge?
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
The Brexit White PaperThe Government’s plan for leaving the EU has been outlined in Theresa May’s “Lancaster House”
speech (17 January 2017) and the Government’s White Paper (2 February 2017).
— 12 principles to guide the Government in implementing Brexit
— Pursuance of a “bold and ambitious” Free Trade Agreement with the European Union
— A desire to seek a mutually beneficial new customs arrangement with the EU, and trade
agreement with other countries.
"no deal for Britain
is better than a bad
deal". – Theresa
May, 17 Jan 2017
“We will forge
ambitious free trade
relationships across
the world” – White
paper, 2 February
2017
“Delivering a smooth,
orderly exit from the EU –
we will seek a phased
process of
implementation”– White
paper, 2 February 2017
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
What does Brexit look like for UK?Overall messages from Government
Customs Union: for both beneficial tariffs and logistics
RoW FTAs: opportunities?
Appeal to EU populations
People: “Brightest and best”
No reserve parachute…yet
Ball now in EU’s court
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
UK General election: Business as usual Government expect to increase majority
Increased room to manoeuvre
Reduced chance of “walk away early”
Increased chance of “deal”
Increased chance of “cliff-edge”
For business, little change since before announcement
Don’t wait and see: Prepare and monitor
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
A busy 2017 for Europe22 and 29 Jan 2017
Socialist primaries
in France
14 May 2017
State election in
Nordrhein-Westfalen
29 March 2017
UK triggers
Article 50
26 Mar 2017
German State
election in Saarland
15 Mar 2017
General election in
the Netherlands
Early Jan 2017
Article 50
UK Supreme Court
Appeal by PM
23 Apr and 7 May 2017
Presidential and general election in
France
7 May 2017
State election in
Schleswig Holstein
24 September
General election in
Germany
Sep 2017
Catalonia plans
independence
referendum
Summer Migrant Crisis Greek debt renewal
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
Brexit Timeline
March 2017 Sept 2017 March 2018 Sept 2018 March 2019
.
Engaging 38 national and
subnational parliaments
Summer of elections and
uncertainty Autumn to autumn: the window for discussions
Perceived likelihood that Article
50 period expires with no deal
Invoke
Article 50
German
Federal
elections
Effective
deadline to
agree political
solution
Drop dead
Brexit
deadline
Time at which those who have
not planned ahead will react
Opportunity to secure capacity and leading position
UK
General
Election
June 2017
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
Many moving parts
Corporate Tax
and Structural
impacts
Your fact
pattern,
your priorities
Immigration &
People
Your industry
sector
Brand,
Customer, and
Identity impact
Your
stakeholders
Exit from
Customs Union
Your employee
profile
Regulatory /
Passporting
Your supply
chain
Brexit
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
How Brexit affects UK businesses
Rooted Interconnected Mobile
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
The EU Network of Current Free Trade AgreementsEUROPE
• Albania
• Andorra
• Bosnia and
Herzegovina
• Faroe Islands
• Iceland
• Kosovo
• Liechtenstein
• Macedonia
• Monaco
• Montenegro
• Norway
• San Marino
• Serbia
• Switzerland
• Ukraine
AMERICAS
• Antigua and Barbuda
• The Bahamas
• Barbados
• Belize
• Chile
• Colombia
• Costa Rica
• Dominica
• Dominican Republic
• El Salvador
• Grenada
• Guatemala
• Guyana
• Honduras
• Jamaica
• Mexico
• Nicaragua
• Panama
• Peru
• Saint Kitts and Nevis
• Saint Lucia
• Saint Vincent and the
Grenadines
• Suriname
• Trinidad and Tobago
MIDDLE EAST
• Algeria
• Egypt
• Georgia
• Lebanon
• Jordan
• Iraq
• Israel
• Morocco
• Tunisia
• Turkey
• Palestinian Authority
AFRICA
• Cameroon
• Madagascar
• Mauritius
• Seychelles
• South Africa
• Zimbabwe
ASIA PACIFIC
• Fiji
• Papua New Guinea
• South Korea
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© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
Impact on logistics
Movement of goods
to Ireland could
suffer delays
May need to establish a
new UK D.C to minimise
cross-border delays.
Significant infrastructure
cost and inventory
duplication would result.
Internal movements
Outbound to customer
Warehouse
Key
EU network, most product imported from far
east. High costs and limited capacity in EU
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
UK food retail
EU Non-EU
Impact on People: Look at the whole chain
Van based e-fulfilmentHigh Street StoresWarehouseFarming
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
Brexit: the impact for IcelandKey Sectors:
- Financial Services
- Life Sciences
- Agriculture and Fisheries
- Data centres
- Clean Energy
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
The impact on the FS sector
9
8
3
1
Jurisdiction
Operating model
(branch/sub)
Back book
Required
market access
Supervisory approach
Distribution impacts
Logistics
2
6
7
4Substance required
5
Outsourcing ability
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
The impact for Life Sciences
• Regulated sector
• Complex, cross border supply chains
• Large geographic footprint – likely to
have operations in multiple locations
• Highly skilled workforce, likely to be
drawn from an international pool
• High number of EU Resident
employees
• Significant exporter, international
customer base
• Depending on manufacturing process
and location, may also be an importer
of goods
Typical features
Companies in this sector are concerned
about:
• Loss of ability to passport
pharmaceutical licences
• Loss of access to EU R&D funding and
collaboration opportunities
• Optimising access to any new UK
incentives for the sector
• Understanding the impact on the
supply chain, in particular non-tariff
barriers
• Quantifying the benefits and costs of a
Brexit driven restructuring
• Risk of a skills shortage, and how to
retain key staff
The Brexit impact
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
Optimise your position1. Understand the pressure points
• Do you trade with the UK?
• Do you have UK subsidiaries? UK staff?
• Is your supply chain reliant on the UK?
2. Quantify the “worst case” impact
3. Use the Brexit Navigator to plot out your action plan and identify key dates
4. Don’t wait and see
• Prepare and monitor
5. Timing is key to maintaining your competitive edge
• Be ready to act when the time is right
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
KPMG Indirect Tax Assessor Tool
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
KPMG Brexit Navigator
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Document Classification: KPMG Confidential
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved.
Keeping you up to date
• Our “Managing Brexit” homepage
• Expert opinion, thought leadership,
Brexit tools and more
https://home.kpmg.com/xx/en/home/ca
mpaigns/2016/07/brexit.html
KPMG.com
• Follow us on Twitter and Linked In
• Receive invites to KPMG Brexit
themed events and webinars
https://home.kpmg.com/uk/en/home/social
.html
Social media
• Our two year roadmap
• Helps you to plot out your key
milestones
https://home.kpmg.com/uk/en/home/ins
ights/2017/04/brexit-navigator-our-two-
year-roadmap.html
The Brexit Navigator
• A fresh perspective on Brexit
• Click to subscribe to our weekly
thought leadership
https://home.kpmg.com/uk/en/home/ins
ights/2016/10/the-brexit-column.html
The Brexit Column
Document Classification: KPMG Confidential
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The information contained herein is of a general nature and is not intended to address the circumstances of
any particular individual or entity. Although we endeavour to provide accurate and timely information, there
can be no guarantee that such information is accurate as of the date it is received or that it will continue to be
accurate in the future. No one should act on such information without appropriate professional advice after a
thorough examination of the particular situation.
© 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.