A study carried out by the European Private Equity & Venture Capital Association and KPMG M&A Tax Services to assess the tax and legal situation across 27 European countries has given France the highest score.
France replaced Ireland as the most attractive fiscal and legal environment for private equity in 2008. Ireland fell to second place and Belgium came in third, pushing the UK out of the top three for the first time since the study began.
Overall, the study found that the gap between the most and least favourable tax and legal environments widened, but the European average remained relatively unchanged in 2008 compared to 2006, the last time the study was done.
Southern Europe countries Greece, Spain and Portugal consolidated their position in the top half of the table with continuous improvements to their tax and legal regimes. Meanwhile the environments in the Netherlands and Luxembourg deteriorated, particularly because of difficulties in retaining talent and incentivising maangers.
Belgium’s entry to the top three was achieved by beneficial changes to its pension fund environment and new fiscal R&D incentives.
Germany, Austria, and Italy all dropped further behind, as reform-friendly countries such as Latvia, Poland and Estonia continued constructively to reform their markets. Meanwhile Lithuania, newly included in the study, entered straight into the top half.
In addition to tax and legal regimes, the study looks at the environment for limited partners, fund management companies and investee companies, as well as the environment for retaining talent at both investment firms and investee companies.
Source: Thomson Merger News