UK has lost its ranking in the top three of Europe’s most favourable tax and legal environments, according to the fourth benchmarking study carried out by the European Private Equity & Venture Capital Association (EVCA) in collaboration with KPMG’s M&A Tax Services.

The study assesses the tax and legal enviroments across 27 European countries for limited partners and fund management companies, investee companies, as well as the environment for retaining talent at both investment firms and investee companies.

It shows France achieved the highest score in the study, followed by Ireland and Belgium, which made beneficial changes to its pension fund environment and new fiscal R&D incentives, pushed the UK out of the top three countries for the first time.

The study also reveals the gap has widened considerably between Europe’s most and least favourable tax and legal environments. This year the highest ranking achieved 1.23, compared with 1.27 in 2006, and the lowest achieved 2.40, compared with 2.35 in 2006.