Spain savings industry needs regulatory reform kick
INVERCO, the Spanish fund management and pensions body, has proposed a number of reforms to boost the sector it says is languishing.
Spanish fund managers have been unable to capitalise on Ucits passporting facilities due to domestic fund and taxation rules, says INVERCO in a recent report. The local industry has virtually no presence beyond the Spanish border, it says.
Measures are needed to rejuvenate the local industry and domestic savings. The proposals include simplification of tax notification requirements and a move to a tax-neutral status for mutual funds.
The association also wants to see the introduction of institutional fund classes and structures, along with more flexible employee share savings schemes.
The proposals would ‘prevent Spain from being relegated to a mere distribution country’, says the INVERCO document. They would also boost the fund industry’s contribution to the economy, tax revenue collection and employment.
Total make-up of Ucits funds (source: INVERCO)
INVERCO calculates that Spanish funds, their investors, managers, depositaries and distributors generated tax payments of almost €10bn over the last five years. Its proposals would have a limited impact on the future tax take by Agencia Tributaria, the Spanish tax authority.
Domestic fund laws suffer from clauses not seen in other countries. It wants to simplify rules that have little real value or restrict the operation and contributions to mutual funds and pensions.
Spanish fund vendors must submit annual tax reports on all overseas investors to Agencia Tributaria, even when none is liable for Spanish taxes. INVERCO says the requirement is both an onerous burden on vendors and of no usefulness.
Limiting or removing the requirement would facilitate the expansion of Spanish funds into the Latin American market where they have significant cultural and shared language benefits, says INVERCO. The change would also put Spanish fund groups on an equal footing with Luxembourg-domiciled funds.