EUROPE - Five industry bodies including the European Property Federation (EPF) are pushing the European Commission to introduce an EU REIT regime, in a bid to transform a fragmented European market into "the largest and likely most efficient property market in the world".
The consortium claims the introduction of a pan-European vehicle would overcome obstacles to cross-border investment, reduce volatility and improve market security.
A study was presented last week by researchers from the University of Maastricht suggesting the proliferation of national REIT structures had increased distortions of competition.
"Simply by ensuring a properly functioning internal market for real estate investment, the EU can make a major contribution to the control and stabilisation of property markets," said its authors.
They claimed the REIT could be introduced with no need for radical tax harmonisation because it does not require an approximation of tax rates on shareholder dividends.
"Tax is one of the major issues but it isn't a huge obstacle," Nils Kok, one of the report's authors, told IPE Real Estate.
"Withholding tax needs to go because it's totally unclear and un-transparent. Beyond that, there needs only to be harmonisation of entry and exit tax. National governments fear they'll lose tax revenues but they can easily be convinced that arbitrarily-chosen restrictions don't make sense."
As a sweetener to reluctant governments, the Maastricht researchers also claimed the existence of an EU REIT would reverse the trend for property firms to set themselves up as REITs in tax havens.
In a speech on the political context for an EU REIT, EPF director general Mike MacBrien acknowledged "it doesn't matter how great it is if we can't get it, and getting it requires EU legislation and getting that is, to put it lightly, not a piece of cake."
However, the "enhanced cooperation" among member states promised by the recent Treaty of Lisbon "will make the whole business of EU law more democratic, more transparent, and just easier in terms of getting things done".
MacBrien added: "It couldn't be done before. It can be done now."
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