The European Commission is urging governments to support the creation of savings and investment accounts that are easy to use and benefit from tax incentives, according to a draft recommendation obtained by Euractiv.
The proposal, due on 30 September, comes as part of a broader push by Brussels to close the EU’s yawning investment gap with the US and China by boosting retail investors’ participation in capital markets. Many EU citizens have a strong preference to keep their earnings in ordinary savings accounts instead of investing in Europe’s real economy.
EU countries should ensure that financial service providers offer “user-friendly digital interfaces and high-quality customer service” to make the accounts “simple,” “reliable,” and “accessible” for individuals, the document notes.
Building on that, tax incentives are described as a potential “catalyst” for uptake. The draft suggests that saving and investment accounts (SIAs) should benefit from at least the most generous tax treatment available under national law.
Income generated by an SIA’s underlying assets, as well as portfolio transfers between providers in different EU countries, could also be exempt from taxation, according to the document.
To make sure that citizens’ savings are directed into the real economy, the accounts’ “investable universe” should exclude “highly risky or complex” assets, including certain crypto assets and derivative products, it notes.
No minimum age limit should be imposed for opening an SIA or for making payments into such accounts, while governments could jump-start adoption by making “lump sum payments” directly into citizens’ accounts, it adds.
The document also calls on capitals to encourage “strong competition” among SIA providers by allowing a “wide range” of financial service firms to offer SIAs to citizens. It warns that “fragmented markets and protectionist behaviours have been detrimental” to individual investors “and to the development of EU capital markets.”
The document does not, however, include any proposal for an “EU-label” to be placed on certain SIAs to encourage retail participation. France argues that such a label would encourage ordinary citizens to invest in the real economy, but this is disputed by many other EU countries.
A fully integrated Capital Markets Union – sometimes referred to as the ‘Savings Investment Union’– could generate up to €470 billion per year, according to the European Commission. This is more than half the €800 billion in additional yearly investments called for by former European Central Bank President Mario Draghi.
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