EUROPE - Several European countries could be in breach of an EU Treaty relating to Undertakings for Collective Investments in Transferable Securities (UCITS), according to a joint report by Price WaterHouseCoopers (PwC) and EFAMA.
The report highlighted Belgium and Denmark and, in particular, the UK, Germany and Austria as imposing “burdensome” administrative requirements based on local law on foreign-based UCITS.
Such administrative requirements are “in contravention” of the EU Treaty and are adversely affecting the attractiveness of cross border funds, the report entitled “Tax discrimination against Foreign Funds: Light at the End of the Tunnel” concluded.
“If all 25 EU countries had similar administrative requirements on foreign fund promoters as are found in the UK, Germany and Austria then it would be impossible to have a single funds market,” said David Newton, financial services partner, PwC. “The burden on cross border providers would be too onerous - these countries need to find a more acceptable solution.”
He added: “As EU law stands such administrative requirements have to be ‘reasonable and proportionate’. As outlined in the report, many of them are not.”
The report also noted tax discrimination in the EU continued to be an obstacle to the creation of a single market despite significant process in removing tax barriers.
Previously managers of UCITS funds faced many discriminations against the sale of their funds in a number of member states and many of the discrimination made it virtually impossible to market cross border funds in certain EU states.
Despite moves made in countries such as France, Ireland and Denmark, UCITS funds sold cross border in the EU still only amount to around 16% of the UCITS market.
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