The Commission aims to present a legislative proposal to address the tax-induced debt-equity bias, also to support the action plan for the Capital Markets Union and to encourage companies to finance their investment through equity contributions rather than through debt financing. While EFAMA fully supports the Commission’s initiatives to relaunch the CMU, we regard the question of whether there is an excessive preference to debt in European corporate tax systems as a wider macroeconomic question - and one that is beyond the scope of our response to this public consultation.

Any blanket restriction on debt deduction would definitely have immediately identifiable consequences on our industry and end investors. Investment vehicles that are fully dependent on the full deduction of interest would need to be protected from the unintended consequences (e.g. disruption of the existing market) of the policy options that are being considered. EFAMA stands ready to assist the Commission in the design of the necessary safe harbour rules for the financial sector, in particular for investment vehicles that are fully dependent on the full deduction of interest.