EUROPEAN UNION: EFAMA issues response on barriers to cross-border distribution of funds

Monday October 10 2016

The European Fund and Asset Management Association (EFAMA) has issued a response to the European Commission Consultation on the cross-border distribution of funds.

EFAMA has identified and prioritised the key barriers for the asset management industry, including:

Legal certainty

Legal certainty is lacking in a number of the steps related to the funds distribution, e.g. absence of a common definition of marketing and pre-marketing activities, multiple standards and rules related to the notification process, lack of common definition of certain investor categories, different processes related to the fees.

Abuse of the flexibility provided by EU regulatory framework

National level additional requirements at times do not appear to address specific investors’ needs, but, instead, amount to the creation of additional barriers for non-domestic firms. For instance, many member states require asset managers to appoint a local agent prior to undertaking distribution in their jurisdiction; however, it is often the case that another agent or the manager located outside their jurisdiction could take on this responsibility in an equally efficient way.

Transparency and clear understanding of all rules for market players

Absence of clear and accessible information or problematic access to it regarding notification rules and rules triggering fees, standard interpretations related to marketing etc. result in significant additional efforts being required to be generated in-house or outsourced to a third party, therefore, rendering the cross-border distribution more expensive and time-consuming for UCITS managements companies and AIFMs.

Tax treatment

Issues such as (i) the discriminatory withholding tax (WHT) treatment between residents and non-residents, which persists in a number of member states, (ii) differences between member states in terms of tax reporting scope and format and, foremost, (iii) inconsistent double tax treaty (DTT) access for investment funds (including cumbersome processes when double tax treaty access is granted).

Click on the above link for the full EFAMA response.