A new report from Finadium explores the substantial impact that changing tax schemes in the European Union have on asset managers and financial markets. Full tax harmonization across the EU is one option being considered, along with the European Commission having the power to tax citizens directly. Less contentious is tax coordination, where individual EU member states work together on isolated issues. Both options create new winners and losers in financial markets. This report is based on interviews with asset managers and broker-dealers in Europe and our review of current EU proposals on taxation, economic development and fiscal policy.
Highlights from this report include:
European tax harmonization does not offer the same kind of explicit benefits to financial markets as other forms of standardization including the UCITS program.
Equal tax schemes between EU member states, whether through tax harmonization or tax coordination, offers benefits for asset managers in reducing administrative expenses to account for multiple tax rates.
A continued reduction in securities lending revenues driven by equal tax codes could result in the elimination of internal asset manager lending desks and the growth of outsourced service providers, albeit at lower volumes than today.
While the financial benefits of trading Contracts for Differences may be diminished by tax harmonization or tax coordination, this market may be large enough already that many traders will not choose to return to equities.
For more information, please contact us at info@finadium.com or visit the Finadium website at www.finadium.com.
