Q&As

What is the impact of a potential Brexit on the tax drafting in loan agreements?

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Produced in partnership with Eloise Walker of Pinsent Masons
Published on LexisPSL on 30/08/2016

The following Tax Q&A produced in partnership with Eloise Walker of Pinsent Masons provides comprehensive and up to date legal information covering:

  • What is the impact of a potential Brexit on the tax drafting in loan agreements?

What is the impact of a potential Brexit on the tax drafting in loan agreements?

None, provided the loan agreement is in Loan Market Association (LMA) standard form.

The tax gross-up and indemnity clauses (and their accompanying definitions) are based in UK domestic and international treaty law, not EU law, so Brexit should have no effect on them. The stamp taxes clause (based on UK domestic law) and FATCA clause (grounded in US law and the UK/US inter-governmental agreement as reflected through UK domestic law) are similarly unaffected.

While VAT is an EU formulated tax, and one might therefore expect the VAT clause to be impacted, this should not be the case. It is highly unlikely that the UK will get rid of VAT once Brexit is effected (it is one of the UK’s key tax revenue generators), and while some changes to the UK domestic rules may

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