Mutual funds fleeing from Sweden to Finland and from Finland to Luxembourg
Increasing numbers of Swedish mutual funds investing in shares and money markets are being registered in Finland and Luxembourg for reasons of taxation.
"The number of Swedish investment funds registered abroad has nearly doubled in this decade", says head analyst Fredrik Pettersson of the Association of Swedish Investment Funds.
The capital held by Swedish funds registered in Finland can be seen in the statistics. Swedish money accounts for more than ten per cent of the EUR 70 billion in capital in investment funds registered in Finland.
Finland's advantage over Sweden is in both lower tax rates and less bureaucracy. "It is much faster to set up a new fund in Finland than in Sweden", Pettersson says.
The situation is positive from Finland's point of view, even though the actual benefits are largely limited to more administrative work. "Finnish companies that keep the funds get more work", notes Markku Savikko, managing director of the Finnish Association of Mutual Funds.
There is no precise information concerning Finnish mutual funds that are registered abroad.
"Some are registered in Luxembourg, but I don't know how many", Savikko says. In any case, the number is growing.
The Nordic Nordea Bank has registered most of its new mutual funds in Finland during nearly a decade, but now Luxembourg is taking a bigger slice.
"There is no tradition in Europe of selling Finnish funds, although in many respects Finland is better than Luxembourg", says Jari Kivihuhta, director of Nordea's mutual fund company.
Nordea promotes its mutual funds in the Nordic Countries, and in a number of countries in continental Europe.
Mutual funds in Luxembourg have better practices in protecting against fluctuations in interest rates, Kivihuhta says. In addition, Luxembourg does not require detailed accounting of the identity of its investors.
In Finland, mutual fund companies need to know their owners.
"Investors are inherently lazy, so they move their funds to where there is least paperwork", explains Savikko of the Finnish Association of Mutual Funds.
Joachim Spetz, chairman of the Swedish Investment Fund Association, said in Monday's edition of the business newspaper Dagens Industri that the flood of mutual funds out of the country has led to the loss of hundreds of jobs in the Swedish finance sector.
Nordea's Jari Kivihuhta notes that the country where a mutual fund is registered does not need to be the same as the country where the fund is managed, and that therefore, the location of registration does not affect jobs in the sector.
Swedish tax authorities are not making any moves to ease taxation on mutual funds, in spite of repeated complaints.
Finnish Association of Mutual Funds