Mon, Apr 23, 2018
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 - Sequoia takes Facebook stake as shares slide in data controversy, $1.4b hedge fund sees intact fundamentals for Facebook, Jim Cramer reveals some 'suggested hedge fund trades' amid the Trump tariffs[more]

    Sequoia takes Facebook stake as shares slide in data controversy From Bloomberg.com: The $4.2 billion Sequoia Fund bought a small position in Facebook Inc. as the stock slid late in the first quarter, investment manager Ruane, Cunniff & Goldfarb told clients. "The recent controversy enab

  2. Activist Investors - Blue Sky-owned Wild Breads faces uncertain future[more]

    From AFR.com: A Blue Sky private equity investment in artisan-style baker Wild Breads enjoyed multiple valuation upgrades despite losing millions and breaching its lending covenants, accounts lodged with the regulator last week show. Wild Breads lost $2.4 million in 2017, but Blue Sky ascribed a hig

  3. Opalesque Exclusive: Barnegat to close hedge fund to outside investors on weak opportunities[more]

    Komfie Manalo, Opalesque Asia: Bob Treue's Barnegat Fund Management said it is closing its $666m fixed income relative value hedge fund to outside investors. "The negative side to gains in Fixed Income Arbitrage is that unless we find new opportunit

  4. Investing - Hedge fund makes a big bet on malls, British hedge fund manager Odey short UK government bonds on QE bet[more]

    Hedge fund makes a big bet on malls From Barrons.com: The dominant narrative on American shopping malls is that they're dead. Crushed by Amazon.com, many brick-and-mortar retail stores are destined for bankruptcy. And where is the most retail, clustered all together? Malls. From a

  5. Performance - Hedge funds suffer first back-to-back loss in two years, Netflix performance burns hedge fund short sellers, Macro hedge fund up 14.5% in first quarter sees dollar falling, Renaissance Technologies rebounds across hedge funds in March[more]

    Hedge funds suffer first back-to-back loss in two years From Bloomberg.com: Hedge Fund returns sank for a second straight month in March, the first back-to-back loss since the first two months of 2016, as trade wars, tech-sector woes and a Fed rate hike dragged down the S&P 500 from its