Fri, Dec 19, 2014
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. Investing - Big hedge funds win again on PetSmart, Riverbed, RBS sells real estate loans to hedge fund Cerberus, Talisman energy speculation: Which hedge funds could benefit?[more]

    Big hedge funds win again on PetSmart, Riverbed From CNBC.com: Another week, another set of wins for activist investors. On Sunday, pet supply retailer PetSmart agreed to the largest leveraged buyout of the year at $8.7 billion. Hedge fund firm JANA Partners had been pushing for a sale a

  2. Outlook - Hedge fund manager who remembers 1998 rout says prepare for pain, Bond guru Bill Gross predicts U.S. economic growth to dip to 2%[more]

    Hedge fund manager who remembers 1998 rout says prepare for pain From Bloomberg.com: Stephen Jen landed in Hong Kong in early January 1997 as Morgan Stanley’s newly minted exchange-rate strategist for Asia. He was soon working around the clock when investors began targeting the region’s

  3. Opalesque Exclusive: U.S. legal receivables fund launched in August[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Investing in asset-backed receivables is a strategy that has been an integral part of the alternative investment space within the overall fixed income asset c

  4. Comment - High fees and low performance hit hedge funds[more]

    From FT.com: Disenchantment over high fees and lackluster performance may finally be turning the tide against hedge funds, fresh data suggest. Despite generally weak returns since the global financial crisis, hedge funds have enjoyed positive net inflows every year since 2010. This helped assets und

  5. Performance - Lansdowne, Man Group, other hedge funds profit from shorts in oil, Turmoil boosts hedge funds that bet against Russia, oil, CTAs post strongest returns since December 2010[more]

    Lansdowne, Man Group, other hedge funds profit from shorts in oil From Valuewalk.com: The rising short interest in oil companies implies that the worst for oil is yet to come. Data from Markit shows that short exposure in energy sector of S&P 500 is still looming close to the highest mar