***Fallout from Brexit in the near term is likely to include greater movement of financial acitivity (including insurance) to other countries in the E.U. due to favorable E.U. policies.
Outflow of capital and multinational professionals can further result in a diminished investment sector and lower real estate prices as demand for housing is reduced.
Drop in values does create U.K. inbound investment opportunities, especially for cash-rich offshore investors.
U.S. exports of goods, however, may suffer as the ability to buy can diminish. Interest rates in the U.K. could also rise; further augmenting this result.***
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E-Alert: Financial and Tax Implications of Brexit

New York , NY — June 28, 2016 — With the passage of United Kingdom’s June 23rd European Union referendum under a sharply divided national vote, the British exit from the E.U., commonly referred to as Brexit, has every indication of creating fallout stretching well beyond its borders.  Much of the impetus behind the votes in favor of Brexit was a reaction to increased E.U. regulation and control—especially in regards to immigration policies.  However, the quick reaction to the decision, evidenced in the precipitous drops in value of the British pound, the euro, the global stock market and lowered U.K. bond credit rating, raises fundamental financial and tax concerns.

It can be reasonably anticipated that while the terms of the actual departure from the E.U. have yet to be negotiated, it will certainly take time, and will ultimately determine the long-term effects. Additional fallout in the near term is likely to include greater movement of financial activity (including insurance) to other countries in the E.U. per favorable E.U. policies. Outflow of capital and multinational professionals can further result in a diminished investment sector and lower real estate prices as demand for housing is reduced.

While the drop in values does create U.K. inbound investment opportunities, especially for cash-rich offshore investors, U. S. exports of goods and services may suffer as the ability to buy can diminish.  Interest rates in the U.K could also rise; further augmenting this result.

As noted, the costs and ability to deploy a mobile multijurisdictional workforce for the near future should also increase as will U.K. ability to obtain lower cost labor from outside its borders.  Outside of E.U. regulations, which eased or eliminated labor certification issues for all participating member countries, the U.K. has a relatively costly and time-consuming process to obtain labor certification.  This will impair access to lower cost labor from other countries.  Hence industries dependent on the U.K. for goods or services will likely face increased costs.

On the tax side, multinationals with interests in the E.U. or the U.K. need to re-examine their structure and eligibility for treaty benefits given the contingency of E.U. status present in a number of treaties.  Until new treaty provisions can be negotiated and executed, withholding and overall income taxes should increase where reorganization to avoid such limitations cannot be promptly effectuated.

Separate from tax treaties, E.U. membership provides to participating member countries exemptions from taxation (viz., no withholding) for subsidiary to parent dividend payments.  Exemptions from taxation by the source country also exist for general payments for royalties and interest.  Unless and until the U.K. can separately negotiates new agreements, the increased tax levy shifts tax revenue away from the U.K. and potentially increases the cost of cross border business with E.U. countries.

Separate from labor certification issues, E.U. member countries have agreements in place that eliminate a dual liability for welfare taxes (viz., social security or similar taxes such as national health insurance) for workers temporarily employed in another member country.  Until new agreements are executed, this additional cost at the individual taxpayer level, foreseeably further impairs (in terms of costs or a readiness to move) transferability of employees to other E.U. countries.

The E.U. VAT rules have been streamlined and simplified in recent years to allow for favorable rates, reporting and/or movement of goods in specified situations in order to ease the barriers to multijurisdictional E.U. businesses.  If not re-negotiated on a stand-alone basis, Brexit could increase the cost from a tax or administrative compliance perspective for multijurisdictional E.U./U.K. businesses.  While some VAT may be refundable, a cash levy, where none existed before, does create some level of new cash flow issues that did not exist previously.  Should the U.K. system become divergent from that of the E.U. (or vice-versa), the potential for double taxation exists.

Customs duties will be impacted.  Currently, there are no customs duties within the E.U. territories and common tariffs are shared with non-E.U. countries.  Hence Brexit will trigger imposition of tariffs where there weren’t any, adding additional costs to doing business—which will also need to be addressed.

Membership in the E.U. also provided access to a broad network of preferential trade agreements with third countries.  All such agreements will now need to be separately negotiated and, until in effect, will increase cross border costs of U.K. businesses.

The impact of Brexit will ultimately turn on terms that are to be negotiated both as part of Brexit and as part of the U.K.’s new autonomous stature.  It will take years to negotiate and finalize such new agreements.  In the near term, reorganization for multinationals, additional costs, legal limitations and potential investment opportunities all should be kept in mind for both U.K. and E.U. transactions.

 

Magda Szabo, J.D., LL.M., CPA, is a Tax Partner in the NYC Office of Grassi & Co. and specializes in international and domestic tax and wealth planning. For more information about Brexit and its implications on financials and taxes, she can be reached at mszabo@grassicpas.com.

Grassi & Co. Welcomes Peter Metz, Principal of Family Office Services and Tax

PeterNew York, NY – June 13, 2016 – Grassi & Co. is proud to announce that Peter Metz has joined Grassi & Co. as Principal of Family Office Services and Tax, based out of the New York City office.

Peter brings over 20 years of accounting experience to the firm and has expertise in financial reporting, auditing, preparing of financial statements, reviews, compilations, tax preparation and projections, forensic work and international tax compliance. Peter has been exposed to many different industries including onshore and offshore investment partnerships, real estate partnerships, dry bulk shipping, wine, activist private equity investing and charities.

Prior to joining Grassi & Co., Peter was the Chief Financial Officer and Senior Vice President of Sterling Grace Corporation, a Family Office based in Locust Valley, New York and Montreux, Switzerland. He was a Company Director and Officer for many of the Family Office’s corporations, partnerships and LLC’s. Peter also has equity and derivative trading and portfolio experience.

“Peter is a great addition to the Family Office Services team,” says Rocco Totino, Executive Partner of Grassi & Co. “With Peter’s experience in Family Office—particularly in the areas of partnerships, LLCs, and structuring & taxation—we look forward to having him help grow that practice area and continue to help better serve our existing clients.”

Peter received his Bachelors of Science Degree in Economics from Cornell University. He also earned his Masters of Business Administration from New York University, graduating as a member of the Beta Alpha Psi Honorary Accounting Society. Peter has been a Certified Public Accountant of New York State for over 20 years and continues his education in tax.

Peter is an active member of the American Institute of Certified Public Accountants (AICPA) and the New York State Society of Certified Public Accountants (NYSSCPA).

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About Grassi & Co.: Grassi & Co. is a premier professional services organization specializing in accounting, auditing, tax, technology, and business consulting. Grassi & Co. was recently ranked the 17th largest Accounting Firm in New York by Crain’s New York and the 7th largest by Long Island Business News. It was also ranked the 73rd largest in the U.S. by Accounting Today and the 74th largest by INSIDE Public Accounting. They have offices in Manhattan, Long Island and Rockland County, NY as well as internationally through its association with Moore Stephens International. Grassi & Co. specializes in professional services for the Not-for-Profit, Construction, Architecture & Engineering, Financial Services, Life Sciences, Manufacturing & Distribution, Retail, Technology, Media & Telecommunication, Transportation, Energy & Natural Resources, and Healthcare industries, among others.

 

 

Grassi & Co. Welcomes Brenda M. Mauro as Director in the Financial Services Practice

Brenda MauroNew York, NY – June 6, 2016 – Grassi & Co. is proud to announce that Brenda M. Mauro has joined Grassi & Co. as Director in the Financial Services Practice based out of the New York City office.

Brenda brings more than 17 years of experience in the Alternative Investment Industry and has a significantly focused background in dealing with hedge funds, funds of hedge funds, private equity, private equity real estate funds, venture capital, SPV’s and SMA’s, family offices and service providers.

Prior to joining Grassi & Co., Brenda owned her own consulting practice, BMM Consulting LLC, where she specialized in strategy, branding and sales processes.  During her career, she helped to build financial services practices for companies in the United States and Europe. Her consulting career has spanned tenure at various professional services firms. Brenda has helped early stage fund administrators bring services to the forefront of the marketplace for emerging managers.

“Brenda’s unique skill sets of operations and overall financial services industry experience, make her a valued addition to Grassi & Co.,” said Ronald L. Honka, Partner-in-Charge of Financial Services. “With her proven track record of strengthening financial services practices, combined with her energy and enthusiasm, I am confident we will meet our short and long term growth goals.”

Brenda is a member of the National Association of Female Executives and Financial Women’s Association, as well as philanthropic organizations including: The New York Foundling Home and the American CMV Association.

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About Grassi & Co.: Grassi & Co. is a premier professional services organization specializing in accounting, auditing, tax, technology, and business consulting. Grassi & Co. was recently ranked the 17th largest Accounting Firm in New York by Crain’s New York and the 7th largest by Long Island Business News. It was also ranked the 73rd largest in the U.S. by Accounting Today and the 74th largest by INSIDE Public Accounting. They have offices in Manhattan, Long Island and Rockland County, NY as well as internationally through its association with Moore Stephens International. Grassi & Co. specializes in professional services for the Not-for-Profit, Construction, Architecture & Engineering, Financial Services, Life Sciences, Manufacturing & Distribution, Retail, Technology, Media & Telecommunication, Transportation, Energy & Natural Resources, and Healthcare industries, among others.

 

 

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Grassi CPA - Top 100 Accounting Firms - Inside Public Accounting In today’s economic environment, Organizations need the proper strategic guidance to help them leverage best practices, maximize profitability, and implement better decision-making.

Each organization is different and deserves to receive personal attention and guidance from experts who understand their business.  Working with advisers who will custom-tailor their services to meet the specific needs of your business, provides value that will translate into savings and growth.  At Grassi & Co., we focus on adding value and offering services that go beyond the traditional financial statement or tax return to ensure your success.

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Our accounting, tax and business consulting professionals welcome the opportunity to learn about your business and provide you with world class accounting services and business consulting expertise. Grassi & Co. has the experience and skill to help you succeed and achieve your strategic objectives.