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Peter de Proft, director general of EFAMA

FTT will reduce attractiveness of savings and supply of long-term financing, says EFAMA

European investors and savers face a very great danger if the FTT proposed by the European Commission is introduced, according to the European Fund and Asset Management Association (EFAMA).

If applied at the start of 2011, EFAMA has estimated that the annual total cost of the FTT would have reached EUR13bn (of which EUR7.3bn attributed to the FTT-zone and EUR5.7bn attributed to countries outside the FTT-zone).

Investors would have paid EUR4bn on the redemptions of UCITS shares/units, whereas EUR9bn would have been levied on the sales and purchases of securities by UCITS fund managers. 

The actual effect of the tax is likely to be even more severe because the tax actually applies various times to each transaction (the so-called “cascading effect” that could give rise to multiple taxation of up to 10 times).

Peter de Proft (pictured), director general of EFAMA, says: “EFAMA is extremely concerned about the detrimental impact of the new FTT on investors in funds including retail investors and savers participating in pension plans and the European economy, especially those of member states within the FTT-zone.

“EFAMA strongly opposes an FTT which will result in fund investors paying the tax (at least) twice, and which will drastically reduce the attractiveness of saving through funds and pension plans. This result would be wholly unjustified in the light of the important social role investment funds play, and the global reputation that UCITS has acquired as a model of excellence in the long-term savings market.

“EFAMA is also concerned about the distortions to the single market damaging the competitiveness of the resident financial institutions leading to unjustified delocalisation out of the FTT zone.”

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