MercoPress. South Atlantic News Agency

Germany warns EU members about a tax-cuts race to attract Brexit business

Schaeuble said “We have no intention to start some sort of race to the bottom”, in response to Osborne's proposal to slash corporation tax to avoid a business exodus

German Finance Minister Wolfgang Schaeuble has said he opposes a “race to the bottom” of competitive tax cuts. He spoke after George Osborne pledged to cut UK corporation tax in response to the Brexit vote and from Paris, in an attempt to attract UK businesses, the French government promised its taxes will be the most favorable in Europe.

 “We want to build the financial capital of the future,” French Prime Minister Manuel Valls said on Wednesday. “In a word, now is the time to come to France.” Valls said.

But Mr Schaeuble warned: “We have no intention to start some sort of race to the bottom”, in response to Mr Osborne's proposal to slash corporation tax to below 15% to avoid a business exodus after the 23 June vote.

France's financial sector has often complained of government indifference towards the industry, which is subject to high taxes and sometimes hostile remarks from politicians. But last month's Brexit vote is viewed as a opportunity by the French government.

The implications of the UK leaving the EU could place a huge question mark over London's place as the centre of Europe's banking business.

“We are bringing solutions today to companies that are asking questions and expecting answers to prepare for the future,” Mr Valls said. He added France's already favorable tax regime for expatriates and French nationals returning from stints abroad would in future be applicable for their first eight years in France, up from five currently.

The scheme includes deductions for non-salary perks like employers paying for employees' children's school fees and for revenue earned on capital held abroad.

Mr Valls said the government would also set up a one-stop administrative point for foreign firms seeking a foothold in France with service in languages other than French.

Bank of France governor Francois Villeroy de Galhau promised French regulators would quickly examine applications from any financial institutions licensed in Britain that might seek to set up in France.

“We are not in a war with London... but there is competition and we want to make Paris Europe's top financial centre,” the head of the wider Paris region, Valerie Pecresse, told bankers.

Socialist President Francois Hollande said last week tax regulations needed to be adapted to make Paris more attractive, in a stark contrast to his description of the finance industry as his main enemy during his 2012 election campaign.

Paris is already the biggest centre for many markets in the euro zone, including corporate bond issuance and investment management, with €3.6 trillion of assets under management.

On Monday, Spain said it was considering granting tax breaks to attract banks and international firms looking to move operations away from Britain after its vote to leave the European Union.