In an effort to improve, simplify and modernise procedures in line with today’s EU financial markets, The European Commission’s fiscal compliance expert group (FISCO) has released a report setting out a range of solutions to remove barriers posed by fiscal compliance rules to clearing and settlement.

Major changes involve streamlining procedures for withholding tax, enabling one party to take full responsibility for granting tax relief, and abolishing paper-form certification in favour of electronically exchanged information.

The report suggests the only logical recommendation to remove the obstacle of transaction tax to be collected by settlement service providers would be to remove the tax-collection responsibilities from local settlement service providers. However, FISCO could not identify another tax collection procedure which would give comparable audit and enforcement powers to tax authorities and ensure a level playing-field and compatibility with various business models.

'Fiscal compliance barriers hinder the functioning of capital markets, are a burden for industry and investors alike and increase the costs of cross-border trading,' Charlie McCreevy, EU internal markets commissioner said.

Further reading:

European law: Harmonisation out of tune