• 09 September 2019
  • Tax

The Tax Expat: VAT and the Big Apple, with Michael Gallacher

If we've learnt anything from interviewing 20 tax expats over the last 11 months, it's that tax offers a world of opportunities - literally! And as tax recruiters, we see everyday what skills from which corners of the world are in high demand.

Within the VAT community, the demand and volume of relocations tends to be inter-Europe and - in recent years - to the GCC. However, many remain unaware of the growing market for European VAT specialists in the US, which is why I'm thrilled to welcome Michael Gallacher to this week's edition of The Tax Expat who's spent the last 5 years working in one of my favourite cities, New York.

Over to Michael...

 

With the increasing presence of European VAT professionals in the US - and New York City being one of the most desirable of expat locations in the world - I’m thrilled to welcome Michael Gallacher to The Tax Expat. 

Michael, thank you for joining us. With New York being one of my favourite cities in the world, I’m excited to hear about your experiences. Before we get started on life in the Big Apple, please can you introduce yourself to our readers?

Thanks Alex! So, to give an overview, I graduated in Law at De Montfort University in 2004 and have spent most of my professional career at EY. I now live in Brooklyn with my wife, son (aged 3), and we have a second child on the way.

In 2007, I joined EY (Manchester, UK) having previously held a regulatory role in local government for a short period. I immediately started focusing on compliance in the rather niche area of VAT within the NHS (National Health Service). From there, I worked my way onto large international accounts and eventually specialized in Global VAT Compliance and Reporting – essentially helping global organizations with their VAT obligations around the world, whilst providing central control and governance.

Michael Gallacher

Thank you, Michael. So the VAT career started off in Manchester but it was 2014 when you made the move to NYC. How did this opportunity emerge and what steps did you take to switch over from EY’s UK to US practice? 

As a Manager in 2014, I was keen to understand if doing an international rotation would benefit my career. Most of the people I spoke to in Senior Leadership had done some work outside the UK, so I raised it with my counselor in our half-year review for discussion and advice. The next day, I received a phone call from one of the Partners in New York asking if I’d be interested in helping the business grow our compliance offering for US-headquartered businesses. There were undoubtedly some phone calls behind the scenes that evening, though I was already aware of a number of international rotation programs that EY offer.

Whilst the initial rotation was to be for three years only, things were going extremely well both professionally and personally, so my wife and I decided to stay and localize onto a US contract. 

At the time you left, you’d clocked up 7 years of experience in the Big 4, so I expect you had a good idea of what sort of career path was available in the world of VAT. At that stage in your career, what was the professional appeal of moving to the US?

Well, it was slowly becoming clear that the US was going to be a major growth market for VAT compliance services. Historically, the bulk of the VAT work sat in Europe with local and regional controllers of the major US HQ companies. However, more and more VAT issues would roll up to the controllers or C-Suite in the US, rapidly increasing the demand for advice and services. As a result of the growth here, the EY VAT practice in America went from being part of our Foreign Desk Network to a team in its own right. EY had clearly seen the potential here, too, and had invested as a future “big bet” championed by Billy Michalewicz, which definitely paid off.

To me, this seemed like a hugely exciting time to become involved and, coupled with the potential to live in a city like NYC, it was very difficult to turn this down!

Michael Gallacher

As well as NYC, I understand that EY’s US VAT practice expands across San Francisco, LA, Dallas, Chicago, Atlanta, and Miami. New York is, indeed, a fantastic city but what were your motives for choosing this location over some of the other options?

Funnily enough, I’d visited the US a few times but never New York. The whole city, and everything I understood about it, was exciting. Nevertheless, we looked to make some practical decisions both for the nature of the work and as a family. 

There are about 25 direct flights back to the UK each day, so getting home quickly and easily (if needed) was always an option. This also made family visits relatively stress free, of which there were and still are quite a lot! The time zone was also a factor, as being in the US, we’re mostly towards the end of everyone’s day (particularly if we were on the west coast, which is 9 hours behind central Europe). So with these considerations, New York felt like a perfect balance.

What was your first impression of New York City?

Overwhelming! It was a relatively relaxed start as EY helped us ship most of our furniture from the UK about 3 weeks before we left, so we took a vacation then flew out to New York on the Sunday before I was due to start. We arrived at JFK Airport around 6pm and headed to our temporary apartment one block from Times Square. 

To shake off the jet lag, we decided to take a walk and try to find the office which is on the south side of Times Square. Well… as the first impression of our new ‘home’, Times Square was certainly an overwhelming initiation to the city! Our first steps in New York were in, perhaps, the brightest and busiest place in the city and it was daunting to say the least. I remember my wife and I turned to each other and both said, ‘what have we done?’. But as you can tell by the fact that we’re still here, we looked beyond the bright lights and adapted to city life. That was, though, the craziest hour of my life!

Michael Gallacher

So perhaps a walk around Central Park would be a more advisable place to start if you’ve just moved to NYC!

So Michael, I often speak with candidates about the global mobility that a career in indirect tax offers but, when we look at VAT, the majority of moves we see are within Europe and, more recently, the GCC. Perhaps due to the US not being a VAT jurisdiction, I find that many people are unaware of the growing presence of European VAT professionals in the US. What role does the European VAT professional play in the US and why not just pass this work to a local agent?

Great question – and this, in fact, formed part of my initial negotiation with the UK firm for the rotation, given there’d be a lot of work we’d simply need to refer back to Europe. I was able to use the skills I acquired in the UK in both helping our clients with their obligations and also training more staff in the UK. 

For our team specifically, having someone trained in a particular country can be extremely helpful for rapid responses to clients in a very demanding market. Take, for example, the new SAF-T regime in Poland. We were able to take the knowledge of someone who joined our team from Poland last month and immediately provide training to the wider group, which can only benefit our clients who will need to comply with each new obligation as the requirements roll out.

I guess that, in such a competitive space, speed is crucial and having the experts on the ground is one way to achieve that! What’s the makeup of your team at EY? 

In the US (at the time of this interview) we have five Partners, two Managing Directors, 10 Senior Managers and another 44 colleagues. As you can imagine, there around 25 nationalities represented so it’s an extremely international team! In fact, we’re the largest VAT team in America and, from what I understand, we’re larger than the other “Big 3” firms combined.

Another round of promotions will take effect on October 1st, so a clear career journey is available to all of our team and new joiners.

That’s a huge team considering the US is not a VAT jurisdiction! So for a European VAT professional who’s toying with a move across the pond, what have you found are the fundamental differences between working culture in New York to London & Manchester?

Where to start! There are so many differences. In the US, FaceTime really makes a difference and I often find myself on the road both domestically and internationally in client meetings or joining a client at one of their overseas locations. Suddenly, selecting an airline or hotel loyalty scheme becomes important as the miles can cover at least one trip back to the UK! We also have a “dress for your day” policy within EY US, which actually works out very well. For example, a meeting at a tech client would be a bit awkward if you arrived in a full suit. In the Times Square office, people tend to be more formal than over on the West Coast. By comparison, I’m always curiously feeling underdressed if I don’t wear a tie in London...

I’ve also noticed a vast ‘work hard, play hard’ culture in the US. Often, Monday to Thursday is tremendously busy. A lot of work we do is with our advisory colleagues who base themselves at a client for those four days in a week and then head home Thursday night. Due to this, Friday’s are definitely quieter, and we see people really maximize every minute of the weekend for time with friends and family. Some of our clients even have official “summer hours” where Monday to Thursday is increased and then Fridays are a day off.

New York on a weekend can involve a packed schedule with meet ups for brunch or dinner, or it can be a quiet time with family at home or at a weekend rental upstate. Even when we go to a sports game, the whole event is geared towards family entertainment, which is very different to attending a UK football (soccer) match. 

I like how you’ve had to use ‘soccer’ there for the American audience reading this… a true assimilation to life in the US! 

These points about the importance of family life are fascinating because I wouldn’t say that I’m alone in associating NYC as a location that appears more suited to expats who are yet to have family commitments. However, this appreciation and respect for family life in US business culture - paired with the family friendly New York lifestyle - challenges this stigma. For those of our readers who have families, what does New York offer for this demographic of expats?

With New York being so diverse, there’s a social group for everyone. I think of it as a cluster of small villages, where you can really get to know everyone in your village, from the barista downstairs to your go-to drycleaner. Our son was born about 18 months into the rotation and, at the time, we lived in a pre-war Manhattan, five story walkup apartment (you might hear some people say all the best places to live are below 14th St). As a new family, this just wasn’t practical with a stroller and no laundry facilities in the apartment. Eventually, we found a good daycare facility and a nice building in Williamsburg, which was almost three times as big as our previous place for about the same rental cost. This became our new village, and meeting parents was very easy. 

Like anywhere, though, you also quickly figure out some good babysitters so that you don’t have to miss out on all that the city has to offer!

Michael Gallacher

So New York is very much open to expats at whatever stage they’re at in their personal life. What about on the professional side - do you feel there’s an optimum point in a tax professional’s career to make this US move?

Interestingly we’re seeing a significant need at all levels, though the optimum does seem to be as an experienced Senior or current Manager. 

A key aspect to our success has been a growing crop of young American-born individuals choosing to move into VAT, which is a nice development considering it’s not (yet) a VAT jurisdiction. The fact that we’re clearly a very joined up global economy and that niche expertise of a VAT advisor is in high demand today, makes this an exciting prospect. 

What do you feel that a VAT career in the US offers the European professional, which they cannot get at home?

One big benefit is that you’re often sitting directly opposite key decision makers or budget holders. You might be meeting with the VP or Global Director of Tax, which can mean faster decisions on moving forward with work. You’re also often at the front end of key strategic decisions that may affect the business operations of many international subsidiaries, whether that be tax planning or technology opportunities. That’s not to say you won’t get those experiences at home but the frequency is just much higher. Typically, I talk with key decision makers at least once a day.

And on this note, how have you seen your own career develop over the last 5 years?

In a growing market, I’ve found that there are always opportunities for any individual. Personally, I currently co-lead our compliance team in the US and there are absolutely opportunities in the pipeline to be a Partner or Managing Director. EY has a structured career path and is very supportive for those who want to progress and can respond to all the challenges that come along with growing a business and a team. 

In addition, I’m getting a level of new experiences I’d never have had in the UK, such as being able to see 25 States to date, helping to build new technologies internally, and facilitate the development of our offshore teams.

With the high growth state of the market, it certainly seems like a very opportunistic time to make a move to the US! 

I want to move on to how you bedded into life in the Big Apple. Historically, New York has always been known as a melting pot of different cultures and, with its economic power, there’s always been an abundance of expats. How did the city’s inherent diversity help you and your wife assimilate to your new life as expats?

There are indeed a wide range of cultures in the city – and it doesn’t take long to stumble upon any number of British expats. We spent the first 18 months living in Manhattan where we quickly made a small group of American friends simply by being neighbours. We’re all still good friends today.

Funnily enough, when we took the plunge and moved to Brooklyn, our end of the hallway was known as “Little Britain” – with all three apartments housing expats. Today, the other two have moved on (apartment turnover is exceptionally fast here!) and we’re excited to meet the future occupants of the apartment opposite, which absolutely will not be empty for more than a few days.

Also, the size of the city means there’s always someone going through the same stage as you. We met some friends who were having children at the same time and even some British expats who had twins the day after our son was born, which was great to have another couple at the same stage of parenthood as us!

Like London, New York is an expensive place to live. How does it compare to London when it comes to cost of living?

From what I can tell, New York and London seem to be about on par. Certain items in New York can be expensive, such as toiletries, but eating out or takeaway food is typically much cheaper. New York - and especially Manhattan - is geographically a lot smaller so it can appear rents are higher. But when you look at typical commute times in the Greater London area and NY, or consider the exchange rate, we’re very similar.

I was in the Paddington area of London recently and stopped by an estate agent window to look at apartment prices in the Paddington Basin. It was clear that, whether you’re looking to buy in either New York or London, it’s going to be very expensive!

Behind all the fun and excitement, relocations come with their challenges. What’s been the biggest struggle in the whole process?

For us, we knew we wanted to start a family in the near future, so this was a huge factor in our decision making process, particularly considering there’s no nationalized health service in the US and maternity benefits aren’t quite as favorable as those in the UK. However, EY has an extensive support network that provided us with so much information, so we were able to make really informed decisions both practically and financially.

We also needed to decide what to do with the apartment and car we owned in Manchester – which, in the end, wasn’t as administratively burdensome as we thought it might be.

There are also small things to adjust to that seem to take a long time. I still cannot tell the difference between a nickel (5c) and a dime (10c)!

 

Culturally, the US and the UK aren’t worlds apart but what is it that you miss about life in the UK?

We definitely miss regular face-to-face contact with our families, though the accessibility to video calling apps has made that a lot easier. Particularly now that we have children, we try to ensure they get as much exposure to their grandparents, uncles, and aunts as possible. 

Family aside, there are some great bars and restaurants in NYC (the food is wonderful) but I do miss a good British pub. 

It seems that since we’ve been gone, there have been some great summers back home. Summer is also a great time to be back in England, though I do love the weather in New York. We always have cold and snowy winters, a very quick spring, and a scorching summer. Autumn, though, is my favorite time of year in New York as it’s still very warm but without the humidity, coupled with the change in colors and a cool breeze – it’s perfect!

If you could turn back the time to 2014 and you had the choice of other US cities on the table, would you have made the same move?

Absolutely. I occasionally toy with the idea of the perfect weather and relaxed culture of Los Angeles, where our team is also growing. But it doesn’t take long for me to experience something in New York that makes me adore the city. Something like a comedy or Broadway show, hockey game, or cocktails on the 60th floor of a Manhattan skyscraper.

I once heard someone say that living in New York is like playing an awesome video game but with the difficulty set to ‘expert.’ This is definitely true, especially with a small family, but it’s still completely workable.

Michael Gallacher

Finally, what advice can you share for other tax professionals who are considering a relocation to the US?

The tax world in the US is huge – of course there’s a significant domestic tax agenda with more than 10,000 taxing jurisdictions in the US so the infrastructure to support a career here already exists. As I said, VAT is an exciting niche market right now and it’s starting to make up a very large proportion of our global VAT revenue. So on that basis, there’s a real opportunity to forge a unique career path. 

Every city in the US can offer something new and exciting and the culture of each region is very easy to embrace. As with any international assignment there are immigration factors to consider. These can sometimes be challenging but, with a bit of patience, most can be resolved. I think the fact that my family and I have decided to stay in the US for so long and start to raise our family here is testament to the quality of life the country can offer.

Michael, this has been a fascinating interview! We’ve yet been able to really hone in on life in New York and I, for one, never really appreciated how livable the city can be for those with families. The fact that both you and your wife have been able to experience living abroad at two different stages of your lives creates a very balanced account of what a move to New York can offer. Thank you for sharing! 

Michael Gallacher

 

Are you a Tax Expat? If so, we'd love to hear about your experiences and share them with our global tax network. For more information, please contact Alex Mann.

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