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March 22, 2007    

Analysts: Tax advantages behind Barclays bid for Amro?

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by Elaine Frei
Analysts: Tax advantages behind Barclays bid for Amro?

Some analysts are saying that one of the reasons that Barclays Bank (LSE: BARC; NYSE: BCS; TYO: 8642) has offered to move its headquarters to Amsterdam if its bid for ABN Amro (Euronext: AAB; NYSE: ABN) is successful is that such a move would give it a huge tax advantage.

While tax experts say that it is much to early to assess the impact of such a move on the taxes paid in the UK by Barclays, it was pointed out that while the bank paid a tax rate of 30 percent in the UK last year, ABN’s total tax rate in the Netherlands was 21 percent. Still, some analysts say that the fact that Barclays intends to remain incorporated in the UK even if it moves it headquarters means that its tax advantage would not be as much as it could conceivable have been.

The warnings that the amount of taxes paid by financial institutions was actually more general than just the worry that the UK could lose tax revenues from a possible Barclays/ABN deal. Experts said that further cross-border deals in the financial sector could leave the UK vulnerable to tax revenue losses more and more in the future. This is a serious consideration in light of the fact that one report puts the amount that the financial services industry accounts for 25 percent of the total income from taxes in the UK.

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