Top Estonian Fintech Evaluates London as a Potential Global Headquarters After Tax Hikes

Tuum, a prominent Estonian fintech company that specializes in core banking and banking infrastructure services, is currently reassessing its plans to establish London as its new global headquarters due to significant business tax increases recently announced in the UK budget. The company, headquartered in Tallinn, is weighing the financial implications of such a move, particularly in light of its efforts to attract investment from various markets, including the United States.

CEO Myles Bertrand articulated that one of the primary motivations for contemplating a headquarters relocation is the desire for heightened recognition in a global financial hub. As Tuum continues to grow, it faces mounting pressure to position itself in a location that is perceived as more prestigious, especially since many investors prefer companies based in major financial centers like London. “Being an Estonia-headquartered company, as we continue to grow, there is always the push for us to move headquarters to a more recognized financial hub,” Bertrand stated. He highlighted that London is often viewed as the fintech capital of Europe, making it an attractive option for firms seeking to bolster their visibility and credibility in the market.

Earlier this year, Tuum successfully completed a €25 million funding round led by CommerzVentures, which underscores the importance of strategic positioning in attracting further investment. However, the recent budget announcements from the UK government, which included a rise in National Insurance employer contributions and increases in Capital Gains tax, have raised concerns about the feasibility of maintaining a London headquarters. Bertrand expressed the need for a careful evaluation of how these changes might impact Tuum’s business operations and financial strategy. “I think we would have to assess what that impact would mean for us, particularly around Capital Gains and whether London continues to be an attractive option for business,” he remarked.

Tuum currently operates an office in London, where it employs 12 staff members, in addition to its main office in Estonia and additional locations in Spain and the UAE. Despite the pressures from the UK budget, Bertrand confirmed that the company does not plan to reduce staff numbers in its London office. However, he acknowledged that alternative locations for a new headquarters, such as Amsterdam, Barcelona, and Dubai, are being explored. Each of these cities offers unique advantages that could make them appealing alternatives for a growing fintech like Tuum.

Interestingly, while the potential move has garnered attention, Bertrand emphasized that Tallinn remains a highly attractive base for Tuum. The city is known for its supportive ecosystem for tech startups, offering various incentives that promote innovation and growth. As such, despite the allure of moving to a more prominent financial hub, the benefits of staying in Tallinn cannot be overlooked.

In a related discussion about the broader impact of the UK budget, Oliver Prill, the CEO of Tide—a UK-based business bank operating in the UK, India, and Germany—provided insight into how similar tax increases affect larger enterprises. While acknowledging that the increase in National Insurance contributions complicates operations for businesses, he indicated that for larger organizations like Tide, which employs 1,600 people, the adjustments are “absorbable.” He stated, “For Tide, I don’t think it will have any implications directly, neither hiring nor wage growth.”

Prill also reflected on the overall budget, noting that while it doesn’t necessarily ease the financial burden on businesses, it does offer some clarity regarding the government’s future direction. He expressed disappointment over the Capital Gains tax changes and the increase in employer taxes but maintained that these challenges would not derail Tide’s strategic growth trajectory.

Both Tuum and Tide’s leadership highlight the delicate balance fintech companies must strike between leveraging the advantages of being based in recognized financial centers and navigating the changing landscape of business regulations and taxes. As these companies weigh their options, the decisions made in the coming months could significantly impact their operations and growth strategies in an increasingly competitive fintech sector.