EUrules on hedge funds will hit taxes
THE HEDGE fund and private equity industries yesterday welcomed a survey that said they pump €9bn (£7.9bn) a year into the tax coffers of European Union (EU) governments.
The survey also says that a proposed EU directive – which seeks to regulate alternative funds over €100m in size with an iron fist – would cause serious damage to EU economies.
Simon Walker, chief executive of the private equity body BVCA, said: “What we cannot accept is disproportionate regulation which would damage the operation of an industry which has not been identified as systemically dangerous or a cause of the financial crisis.
“This research reveals in stark terms that the directive as currently drafted would be deeply damaging to economies across Europe.”
Andrew Baker, chief executive of hedge fund body AIMA, said:“The findings prove that our industry makes a strong and tangible contribution to the economies of Europe”.
The survey also found that tax contributions from the hedge fund and private equity sectors are big enough to pay the entire EU overseas aid budget for 12 years.
And they are almost enough to cover France’s annual payout under the Common Agricultural Policy.
The UK government gets £5.3bn in tax revenues from the industries each year. In just two years, this could cover the entire cost of the London 2012 Olympics, according to the report.
The report, by think-tank Open Europe, said: “In a worst-case scenario, thousands of jobs and millions in tax revenues could be at stake.”
In the first year, the directive would cost the asset managers Europewide between €1.3bn and €1.9bn, the report claims, falling to an annual cost of as much as €985m, which would be passed on to investors.
And the survey claims the draft directive is already hampering the hedge fund industry. Eight per cent of respondents have already delayed launching a fund amid fears over the new rules, it said.