Recent developments in the EU on a new venture capital initiative

Between June and early August the Commission consulted on proposals to establish a new European venture capital regime. The amount of available venture capital has fallen significantly in the wake of the financial crisis, with a knock-on effect for businesses, particularly SMEs.

The Commission has identified two problems confronting venture capital funds that intend to raise capital and invest on a cross-border basis in the EU. The first is the legal and administrative obstacles investors face; the second consists of double taxation and tax treatment uncertainties.

In order to eliminate these obstacles, the Commission has outlined the idea of introducing a European “passport” which would allow venture capital funds to raise capital and invest in all member states on registration in any one member state. The Commission also proposes to extend current systems of mutual recognition.

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