Taxing Situation For HFs In Europe

Hedge funds may want to think twice before they set up an onshore fund in Europe. That advice comes from Robert Mellor of PricewaterhouseCoopers, who told AccountancyAge.com that some of the new, more complex hedge fund strategies have caught the eye of European tax folks. “With the emergence of some of the new fund strategies, the risk of creating a taxable presence in an onshore EU jurisdiction is significantly increased.” Complicating matters even further for hedge funds are the diverse tax policies through the Europe. For example, in Austria and France, HFs are “fund transparent,” while they’re flat-out tax-exempt in Germany and Ireland, and tax-exempt in Denmark, save a final withholding tax on 15% of dividends from Danish companies. In the U.K., the taxing scheme is more detailed, and in the Netherlands funds are either transparent or subject to a special tax regime, where there is no corporate income tax. “The industry want to be able to distribute products in Europe,” said PricewaterhouseCoopers’ Debbie Payne in an AA interview, “but this will remain difficult if the tax treatments continue to differ in member states.”