Tue, May 3, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Baronsmead warns asset managers of 'billion dollar' liability to Greek bonds

Monday, June 09, 2014
Opalesque Industry Update - Baronsmead Partners LLP, the specialist hedge fund insurance broker has today issued a warning to the non-domiciled fund management industry over tax liabilities, especially those with significant capital invested in Europe. Baronsmead has been closely monitoring the tax situation in Greece and across Europe advising clients on potential liabilities coming to the fore.

A note from the Hellenic Ministry of Finance last month announced that any gains derived by non-resident owners of government and corporate bonds would have to be declared to the Greek tax authorities and would be subject to a tax rate of 33% for legal entities and 20% for solitary investors.

Industry estimates predict that perhaps as much as $1 billion has been invested since 2012 in Greek corporate bonds and is therefore at risk from tax liability exposure. While fears over an immediate implementation seemed to have been calmed following a subsequent announcement on 15 May, there is still uncertainty around how the Greek tax authorities plan to deal with the tax liabilities in the longer term and as such investors remain concerned.

Baronsmead work with a number of fund managers who have expressed their concern with the situation in Greece as well as the potential for other European countries to follow suit. With strong ties to tax experts across Europe, Baronsmead believe that these exposures remain a genuine threat to investors.

Tax authorities across Europe have long since been wrestling with whether to pursue outstanding tax liabilities of non-resident funds but the potential for the authorities to impose a retroactive tax remains very real. It is entirely possible that the recent activity in Greece will stimulate other jurisdictions to decide on a path of action which potentially could leave the asset management industry with huge tax liabilities.

David Heathfield, Partner and General Counsel at Baronsmead, said:

“Having first proposed a retroactive tax for gains made on Greek corporate and government bonds, the Greek authorities then released a circular seemingly revoking the measure. It remains unclear but if that is Greece’s final position, the industry shouldn’t consider this a dodged bullet but a shot across the bows. The retroactive tax issue has been a dark cloud on the horizon for a few of years now and continues to create significant financial uncertainties for many of our clients.

We have been advising our clients that there are insurance options available to protect them against their potential exposures. If other jurisdictions do decide to clarify their intent, the tax liabilities facing the investment industry could be enormous. Now is the time for asset managers to prepare themselves and make sure they’re protected.”

Baronsmead

Press Release

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Hedge funds see $14.3bn outflows in Q1, CTAs and multi-strategy lead net inflows[more]

    Komfie Manalo, Opalesque Asia: The hedge fund industry saw net outflows of investor capital in the first quarter of the year, totaling $14.3bn, data from Preqin showed. This continues from the $8.9bn overall net outflows that funds recorded in Q4

  2. Third Point calls Q1 "catastrophic" for hedge funds[more]

    Bailey McCann, Opalesque New York: The first quarter of this year was rocky for hedge funds based on aggregate performance from the industry, but now we are beginning to hear what the managers thought of it as quarterly letters make their way to investors. Dan Loeb, CEO of New York-based $17 bill

  3. Asia - Stabilization of China's capital outflows may hinge on Janet Yellen, Fink says China to do well this year as bubble threat postponed, Chinese hedge fund to invest in India’s infrastructure[more]

    Stabilization of China's capital outflows may hinge on Janet Yellen From Bloomberg.com: Whether China’s recent stabilization of its currency and capital outflows continues -- or downside pressure reignites -- may hinge in large part on Janet Yellen. If the Federal Reserve chair sticks to

  4. …And Finally - After all, judges are human too[more]

    From Newsoftheweird.com: In March, one District of Columbia government administrative law judge was charged with misdemeanor assault on another. Judge Sharon Goodie said she wanted to give Judge Joan Davenport some files, but Davenport, in her office, would not answer the door. Goodie said once the

  5. Comment - Unmasking the men behind Zero Hedge, Wall Street's renegade blog[more]

    From Bloomberg.com: Colin Lokey, also known as "Tyler Durden," is breaking the first rule of Fight Club: You do not talk about Fight Club. He’s also breaking the second rule of Fight Club. (See the first rule.) After more than a year writing for the financial website Zero Hedge under the n