Taxation and corporate strategy in the single market
| Published date | 01 March 2004 |
| Date | 01 March 2004 |
| DOI | https://doi.org/10.1108/13581980410810678 |
| Pages | 45-50 |
| Author | Travis Barker |
| Subject Matter | Accounting & finance |
Taxation and corporate strategy in
the single market
Travis Barker
Received: 6th October, 2003
Investment Management Association, 65 Kingsway, London WC2B 6TD, UK; tel: +44 (0) 207 831 0898;
fax: +44 (0) 207 831 9975; e-mail: tbarker@investmentuk.org
Travis Barker is European Policy Analyst
at the Investment Management Association
(the trade body representing the UK asset
management industry). He trained as a
chartered accountant at Pricewaterhouse-
Coopers, and is currently researching a
PhD on the relationship between regula-
tion and corporate strategy in the financial
services industry.
ABSTRACT
KEYWORDS: taxation/tax discrimination,
asset management/UCITS, European
Union, European Court of Justice
In order to realise economies of scale in the Eur-
opean single market for investment funds, asset
managers have typically sought to distribute a
single range of investment funds into as many
European markets as possible. They have there-
fore developed an ‘offshore’ business model: of
establishing a single fund range in, say, Lux-
embourg or Dublin, and distributing that range
throughout the EU. European legislation has
evolved in support of that business model — in
particular, the UCITS Directive.
However, persistent tax discrimination con-
tinues to undermine cross-border sales. Tax dis-
crimination is illegal, and the European Court
of Justice has regularly ruled against countries
with discriminatory fiscal regimes. The vagaries
of the judicial process, though, and recent juris-
prudence, may unwittingly lend strength to dis-
crimination.
Should asset managers therefore revisit their
offshore business model, or should European
institutions revisit the way they address issues
of taxation in the Union?
INTRODUCTION
‘The internal market has been a tremen-
dous force for economic and social good.
But much of its potential is being
wasted: it’s as if we are driving a Ferrari
in second gear.’
Two weeks after Internal Market Commis-
sioner Frits Bolkestein made these remarks,
the Investment Management Association
(IMA) launched a major report describing
precisely how to shift up a gear towards a
single market for asset management.
1
The
purpose of the report is to set a future
agenda for policy makers (particularly
given the prospective appointment of a
new Commission after forthcoming Parlia-
mentary elections), and to increase the pro-
file and impact of asset managers in
Brussels.
The report was commissioned from Dr
Friedrich Heinemann of the Zentrum fu
¨r
Europa
¨ische Wirtschaftsforschung (a lead-
ing economic research institute) who was
instructed to identify: the economic bene-
fits of the provision of efficient savings pro-
ducts in a single European market; and the
barriers that are preventing those economic
benefits from being realised.
Page 45
Journal of Financial Regulation and Compliance Volume 12 Number 1
Journal of Financial Regulation
and Compliance, Vol. 12, No. 1,
2004, pp. 45–50
#Henry Stewart Publications,
1358–1988
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