The European Commission has vowed to remove fiscal barriers to efficient cross-border trading, as a new report highlights the obstacles created by national witholding and transaction tax laws.
The investigation, conducted by the The European Commission’s Clearing and Settlement Fiscal Compliance (Fisco) expert group, analysed how national differences in tax laws hinder the functioning of capital markets and increase the cost of cross-border settlement.
In particular, it found that procedural tax rules often prevent foreign intermediaries from obtaining direct access to the local Central Securities Depository (CSD), and impose significant collection costs on foreign settlement service providers.
The report states: "This issue may put certain settlement service providers at a competitive disadvantage in comparison with others."
Internal market and services commissioner Charles McCreevy welcomed the findings: "The Fisco Study will help us to identify and tackle many of those fiscal compliance practices and procedures that are current barriers to more efficient pan-European securities trading in the EU."
This is an area that was highlighted by the group of financial experts chaired by Alberto Giovannini and is being addressed in parallel with investigations into market infrastructures.
The Fisco group will issue a further report proposing solutions by early 2007.
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