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Investors could face tax triple whammy, says IMA

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European Commission proposals for a financial transaction tax could see Ucits investors taxed three times, according to the Investment Management Association (IMA).

Julie Patterson

Julie Patterson

The Commission says the tax is a means of ensuring the financial sector makes a fair contribution to “the cost of re-building Europe’s economies and bolstering public finances”.

However, Julie Patterson, the director of Authorised Funds and Tax at the IMA, says pension and Ucits fund investors could be taxed more than once.

She says: “Pension funds could be hit twice by this tax: when the fund manager arranges a transaction on behalf of the fund and when the fund acquires or sells that asset.

“Ucits investors could be hit three times, as they may also be taxed when they buy units in the fund.”

While some products will be caught more than once, insurance-based investment products would avoid the tax altogether, based on the fact they are not strictly ‘financial instruments’ says Patterson

She warns such a tax could “create distortions between Europe and other key financial centres” and ultimately lead to a loss of business in the eurozone.

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