European fund mergers stall

European asset managers should be able to merge funds across national borders under new regulations without triggering prohibitive tax liabilities, but have been scared away from doing so by an earlier industry report, according to Ernst & Young, the consultancy in comments made in March 2012.

That report, issued in 2010 by the European Fund and Asset Management Association and the consultancy KPMG, concluded that the merging of funds, a key proposed benefit of last year’s European Union-wide Ucits IV directive, would incur stiff taxation. It called for a new EU tax directive to harmonise tax treatment across all 27 member states in order to smooth the way for mergers, which would create the scale required to lower fees.

ESO: Background information: Several markets miss Ucits deadline http://www.europeansources.info/record/several-markets-miss-ucits-deadline/

European Commission: DG Internal Market and Services: Investment Funds: Revision of the UCITS Directive http://ec.europa.eu/internal_market/investment/ucits_directive_en.htm

European Fund and Asset Management Association: Homepage http://www.efama.org/

---