Hedge funds and Private Equity - PES

96
Article 93
The Council shall, acting unanimously on a proposal from the Commission and after
consulting the European Parliament and the Economic and Social Committee, adopt
provisions for the harmonisation of legislation concerning turnover taxes, excise duties
and other forms of indirect taxation to the extent that such harmonisation is necessary to
ensure the establishment and the functioning of the internal market within the time limit
laid down in Article 14.
The directives on the taxation of savings income (2003/48/EC) and the Parent subsidiary directive
(2003/123/EC) should be relevant for the alternative investment sector. The former has the
aim of taxing interest earnings at the actual place of residence of the beneficiary. Here it is not
the investment companies but the investors themselves who are subject to the tax.
The aim of the Directive on the taxation of savings income is to enable savings income,
in the form of interest payments made in one Member State to “beneficial owners” who
are individual residents for tax purposes in another Member State, to be made subject to
effective taxation in accordance with the laws of the latter Member State. The automatic
exchange of information between Member States concerning interest payments is the
means chosen to achieve effective taxation of these “interest payments” in the Member
State where the beneficial owner is resident for tax purposes. Member States must therefore
take the necessary measures to ensure that the tasks necessary for the
implementation of this Directive – cooperation and exchange of banking information – are
carried out by paying agents established within their territory, irrespective of the place of
establishment of the debtor of the debt claim producing the interest.
The Council Directive on the common system of taxation applicable in the case of
parent companies and subsidiaries of different Member States as amended by Directive
2003/123/EC, is applicable by each Member State: 1) to distributions of profits
received by permanent establishments situated in that State of companies of other
Member States which come from their subsidiaries of a Member State other than that
where the permanent establishment is situated; 2) to distributions of profits by companies
of that State to permanent establishments situated in another Member State of companies
of the same Member State of which they are subsidiaries.
In summary: For the regulation of investors, Hedge Funds and Private Equity Funds, several legal
bases are available, depending on the specific regulatory aim.
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