Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

CHALLENGES & OPPORTUNITIES

and Belgium) or levy withholding taxes (among jurisdictions committed to withholding tax are Austria, Belgium, Luxembourg and Switzerland). In this framework, a Taxable Income per Share (TIS), corresponding to the taxable value of each share for EUSD purposes in the event of a sale or redemption payment, and a Taxable Income at Distribution (TID), corresponding to the tax- able portion of each distribution for EU Savings Directive purposes, will have to be calculated and published via financial data providers or local financial newspapers when foreign funds are distributed to individuals in Austria, Luxembourg or Switzerland. The EU Savings Directive application proves particularly burdensome for UCITS as fund management companies are re- sponsible for accurate TIS and TID calculations for the various jurisdictions. Future tax changes should be carefully watched, in particular the US Foreign Account Tax Compliance Act (FATCA), with which asset managers will have to comply by the start of 2013. FATCA is designed to force foreign financial institutions – including investment funds and hedge funds - which engage in business in the United States, to enter into agreements with the US tax authority (IRS) to identify and report on US taxpayers annually. It will therefore generate ad- ditional tax reporting constraints. All intermediaries that distribute funds will need to be FATCA compliant or the funds themselves will face 30 per cent tax 32 .

3.2.2

Tax representative appointment and reporting to local fiscal authorities

Finally, in some countries foreign funds may have to face additional and onerous administrative requirements such as the mandatory appointment of a tax representative and/or reporting to local fiscal authorities. These requirements are listed below for the top 7 target markets as at January 2011:

Table 7: Fiscal requirements for the top 7 target markets

Country of distribution

Fiscal representative requirement

Local tax authority’s reporting requirements

For fully and partly transparent funds, publication of: • the annual Deemed Distributed Income with certification of Certified Public Accountant (CPA) or tax consultant within 4 months following the fiscal year end; • the Dividend Distributed Income with certification of CPA or tax consultant within 4 months following the fiscal year end.

Germany

No

Austria

Yes unless “black funds” status

For white and extra-white funds, submission of the annual Deemed Distribution Income.

Financial reporting submission to Banque Nationale Suisse. The fund has to report details of the amount and description of income accumulated using equalisation, for inclusion in the annual accounts.

Switzerland

No

Netherlands

No

No tax reporting required

One distributor must be deisignated to act as

Spain

representative of the fund and will be responsible for submitting the required information to the CNMV.

Fiscal reporting at fund level to apply the roll-over relief for income tax (IRPF).

In order to achieve maximum tax efficiency, UCITS distributed to retail investors in UK should benefit from the “UK fund reporting regime ” .

UK

No

France

No

No tax reporting required

Source: CACEIS, 2011

32 Source: Ignites Europe, “US rules big issue for European managers”, 20 September 2010

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