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Cross-border
economic
development
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Cross-cutting themes in cross-border economic development
The legal, administrative and tax obstacles
to the creation of such funds however
constitute strong disincentives:
- Venture capital funds investing in other Member states are
subject to double taxation because their cross-border business is
deemed to constitute a taxable presence in the country where the
investment has been made.
- Monitoring and transparency rules applicable to venture capital
funds vary from country to country. This limits their mutual cross-
border recognition and exposes them to the risk of double taxation.
Aware of the adverse impact of these obstacles on business funding and
competitiveness, the European Commission appointed an independent
working group of tax experts from May 2007 to June 2009, which led
to a report
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and recommendations. A public consultation was also
launched on 3 August 2012 to identify the concrete problems and work
to lift the obstacles to cross-border investment by venture capital funds.
These two initiatives have nonetheless not yet led to substantial reforms
that would significantly improve the framework conditions encouraging
cross-border investment in venture capital funds and their mobilisation.
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The Greater Region
is the most advanced cross-border territory
in this area along France’s borders. In addition to EUREFI, a mainly
private instrument, institutional players are working to improve
SMEs’ access to cross-border venture capital.
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The
“Seed4Start” platform,
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coordinated by Luxembourg and
Lorraine economic partners aimed to help connect entrepreneurs
of the Greater Region with private investors for the financing of the
creation, takeover or development of innovative business start-ups.
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European Commission,
Report of Expert Group on removing tax obstacles to cross-border
Venture Capital Investments.
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See project factsheet page 95.
However, efforts still need to be made in two areas: better
coordination of public and private financing within these funds and
developing support to businesses throughout their lifecycle and the
innovation cycle (R&D, design, marketing and development).
In a nutshell…
The frameworks for the funding of partnerships and projects are
as diverse as the providers of funding and potential recipients
are numerous. European funding may be distinguished from
national funding bodies, funding by territorial authorities and
cross-border venture capital funds. In cross-border territories,
available European funds are mainly the ERDF, along with ETC
programmes. In France, Bpifrance is responsible for promoting
the financing of activities that may be targeted at cross-border
areas. From time to time, territorial authorities launch calls
for cross-border project proposals, which are more limited
financially, using their own funds.