ALFI WANTS SUBSCRIPTION TAX REVIEW
Luxembourg’s fund chiefs are calling on the next government to reorganise the subscription tax on funds to help lower their operating costs.
Less than a month before the legislative elections, on Monday Alfi outlined a list of recommendations for the next leaders of the country.
The subscription tax review is applied at a rate of 0.05% on assets under management, contributing €971 million to the government’s finances.
The system was imposed 30 years ago with a view to simplifying the process, Alfi vice president Freddy Brausch said on Monday. He explained that as stakeholders face cost pressures, particularly for passive management funds, the tax poses a competitive disadvantage compared to other markets.
Not that the industry is struggling in Luxembourg. It manages more than €4 trillion in assets and remains the number one in Europe with 26% of assets under management on the continent. “It’s when the weather is good that you have to put the roof on the house,” Alfi president Denise Voss said on Monday.
In addition to the tax review, Alfi would like the government to renegotiate certain double taxation treaties for the main countries which work with Luxembourg on funds.
And with regards to the funds ecosystem in Luxembourg, Alfi called for the transposition of key European directives on funds to be done in a timely manner to ensure a stable legal environment.
It also wants to see the creation of a framework for real estate funds and better promotion of responsible investment funds, in particular those contributing in the fight against climate change. According to Alfi deputy general manager Anouk Agnes, assets under management in sustainable funds doubled from 2010 to 2016 to around €500m.
In terms of education, the representatives called for financial education to be made an integral part of school curricula. At the same time, they would like to see the introduction of a university course in risk management.
Luxembourg is the second most important centre in the world for investment funds. The sub group of the financial sector employs some 14,000 people and contributes 46% of all tax revenue from the financial sector.
More information about the recommendations from Alfi can be found in this press release.