European Fund Managers Lobby For Tax Harmonisation On Funds

by Carla Johnson, Investors Offshore.com

26 July 2001

The European federation of fund managers, FEFSI announced recently that it will be lobbying the European Commission and EU member governments, regarding the inequalities in taxation between domestic and foreign funds. According to Steffen Matthias, the organisation's Brussels based Secretary General, discrimination against foreign funds in the majority of European Union countries is preventing the development of a real single market for funds, adding greatly to costs which are passed on to the investor, and cutting into assets under management.

FEFSI has announced that it will be putting pressure on the governments of 11 countries which it has identified as placing discriminatory restrictions on foreign UCITS: Austria, Belgium, Denmark, France, Germany, Greece, Ireland, Italy, The Netherlands, Portugal, and the United Kingdom. Finland, Luxembourg, Spain, and Sweden are the only countries to have escaped the wrath of the FEFSI.

The amount and type of discrimination against foreign funds varies from country to country, and in collaboration with PricewaterhouseCoopers, the organisation has put together a discussion paper on the subject, which it has sent to the EU. Barriers identified in the report include special rules for foreign held assets in Austria, a Belgian tax on distributions to individual investors, and the French imputation tax system, to name but a few.

In addition to the direct pressure from the European fund managers group, all discriminatory measures will eventually be subject to scrutiny under the European Union Consolidated Treaty. EU Internal Markets Commissioner, Frits Bolkestein, has indicated that the organisation intends to take action to enforce the treaty terms wherever necessary, and is in the process of deciding how this can best be achieved.

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