Von der Leyen: €300 billion in European savings flown overseas every year, primarily to the US, will be invested in Europe from now on. All 27 EU states agreed to establish the S&I Union, a step toward the full Capital Market Union

[u/paneuropeanism_]

https://streamable.com/4h43qk

[u/NeckFederal3462]

ELI5:

Apparently, around €300 billion of European savings leaves Europe every year, with a large part ending up invested in the US.

The EU now wants to change that.

The basic idea is:

European savings → European investments → European companies

The 27 EU countries agreed to create a Savings and Investments Union (SIU), which is basically a step toward making the EU's financial markets work more like one big European market.

The goal is to make it easier for Europeans to invest across the EU and for European companies to raise money from European investors.

So this doesn't mean the EU is going to suddenly take €300 billion out of US investments.

It means they want to stop so much European money from flowing abroad in the first place, and make Europe a more attractive place for that money to be invested.

In very simple terms:

Europe has the money. Europe has the companies. The EU wants to make it easier for the two to meet.

[u/Individual-Toe-1959 → u/NeckFederal3462]

Thank you!

[u/loulan → u/Individual-Toe-1959]

Honestly I don't get it. People invest in the S&P500 (and world ETFs which contain a lot of S&P500) because they want to benefit from US growth, which is driven by tech and AI.

You can make all European markets a single one, it won't change that. People can already buy Europe ETFs with one click. It's not hard. Difficulty not the reason why they invest so much money into US companies.

Europe has the companies.

Not really. We barely have any tech, which is where growth is. That's the actual issue.

[u/Jaeger_Meister_ → u/loulan]

There is barely tech and AI because our investment climate is not great. Issues finding investment and regulatory burdens across member states. This addresses at least one of the issues, and the other is being addressed by another initiative. Also I'm all for unbinding our fate to that of the US, even if it costs us right now

[u/PunkPirate56364 → u/Jaeger_Meister_]

Yep. Europe has tech startups, which can't get investments they need, then american tech companies just buy them.

[u/hardolaf → u/Jaeger_Meister_]

The main issue with startups in Europe is that many countries tax stock options and restricted stock units on the date of the grant and not on the date of exercise or vesting. That means employees get hit with massive tax bills for something that they may never see. Beyond that, they often get taxed on imaginary values with no way to sell any of the asset to cover the taxes. Without fixing the tax codes in Europe to work sanely with this sort of compensation, no amount of government intervention on the subsidy or monetary side is going to result in Europe actually being able to compete with the rest of the world on technology.

[u/Hutcho12 → u/hardolaf]

Where in Europe do you have to pay taxes before vesting? Never heard of that before. They might not even vest if you don't work there anymore.

[u/Graham110 → u/Hutcho12]

Netherlands or Denmark I think 🤔

[u/Top-Squash6558 → u/Hutcho12]

Netherlands and Denmark currently. Then add ‘terrible for startups’ to the list. Denmark have not added a new company to the stock exchange in +1000 days.

[u/chard47 → u/Top-Squash6558]

In the NL you do not pay tax before vesting.. only when you exercise the option or they are transferred into shares!

[u/Sensanaty → u/Top-Squash6558]

In NL you have to buy to cover if you decide to convert your stocks into cash true, but you're not forced into it, and you're still not really "losing" money either (well, unless you believe all tax is theft anyways, which is an ideology I subscribe to personally). They're also getting rid of the idiotic "potential gains" tax so it's not that bad of a situation. I work for a large company and get RSUs on top of a great salary, I don't even bother selling my stock grants when I get them annually and they've accrued a decent penny. Obviously once I sell the taxman will want his pound of flesh, but that's the same situation as in the US.

I do work for a public company though and things change if you work for startups of course, but the overwhelming majority of startups here don't even offer any kind of equity to begin with so it's a bit of a moot point.

[u/Portugearl → u/Sensanaty]

I'm actually quite curious how someone living in the Netherlands believes "taxation is theft"! Public services are stellar, public transport is clean, speedy, frequent, comfortable, and reliable. Urbanism is world-class, there's bike lanes everywhere and public places are well cared for. Even in the largest cities, parks are plentiful and well-tended. Courts are speedy, the police is mostly competent. Healthcare is very good as well.

What I'm saying is: if I lived in a shithole, yeah I'd be pissed paying my taxes if nothing worked properly and the streets were dirty and dangerous and run-down. But in a country like the Netherlands? Baffling

[u/FemFiFoFum → u/Top-Squash6558]

I feel like Denmark is generally always in the top list of "best countries for startups".

https://www.usnews.com/news/best-countries/rankings/opportunity As a quick example.

[u/Infamous_Thought_189 → u/FemFiFoFum]

But thats exactly the problem. Great for a startup! But once you scale up you get out and go to the US! Exact same thing happens in the Netherlands.

[u/hardolaf → u/Hutcho12]

Germany and Sweden (this is why Spotify left for NYC) are the two that come to the top of my head as the most egregious but I know most in same way treat the compensation incorrectly for regular employees.

[u/Hutcho12 → u/hardolaf]

You do not pay on grant in Germany, only on vest which makes sense.. it is income that of course is taxed..

[u/hardolaf → u/Hutcho12]

And what if it's stock in a startup with an illiquid stock, an imaginary valuation driven by investors to make it look more valuable than it is, and no OTC market willing to even entertaining buying the stock at even 1% of the imaginary valuation?

I know that Germany fixed some problems but they still haven't fixed that issue.

[u/Character-Second781 → u/hardolaf]

a startup with an illiquid stock, an imaginary valuation driven by investors to make it look more valuable than it is, and no OTC market willing to even entertaining buying the stock at even 1% of the imaginary valuation?

Honestly, any country disincentivizing that is probably going to do fine in the long term. Startups don't have to be 50% scam as they can be in the US.

[u/Ingoiolo → u/Hutcho12]

It doesnt really, if it is a restricted security.

I run a PE fund and I cannot give traditional carry to my German team. For a 10y fund, carry vests a small % per year. So in Germany, employees would be hit by dry tax every year, for something that in 10 years might be worth a lot…. Or nothing

[u/Hutcho12 → u/Ingoiolo]

If you can’t sell it, that’s indeed a problem.

[u/CopperSulfateII → u/Hutcho12]

Paying tax on vesting sucks as much as on grant. 

Just do like the american ISOs. Tax the spread on exercise and give preferential tax treatment after that, or do cashless exercise on exit (ie sale of the option)

[u/EarthTwoBaby → u/hardolaf]

That means employees get hit with massive tax bills for something that they may never see. Beyond that, they often get taxed on imaginary values with no way to sell any of the asset to cover the taxes.

That's simply not true, at least in France (and in most countries of Europe). There was a french law proposing to tax acquired stocks that gain value over time but this is still not the case.

[u/hardolaf → u/EarthTwoBaby]

This is only true since Macron got rid of the wealth tax. Most European nations are still screwed up in how they handle the tax situation. I think Poland also had fixed their laws a few years ago to make it like the USA.

[u/loulan → u/Jaeger_Meister_]

I mean sure it's an improvement. But the claim that €300 billion will stay in Europe is dubious, unless I'm missing something.

[u/AssistanceCheap379 → u/loulan]

Its more of a slow move. Today 300 billion, next year maybe 280 billion, with 30 billion more invested in EU markets.

It’s impossible to move the entire system in one go, but its possible and very viable to do it in 10-25 years depending on how aggressive the EU would be in it

[u/rezistS → u/loulan]

Simplified best case in a vacuum scenario makes for more clicks when put into a headline.

It also makes it seem like the policies work before they are even implemented to in turn make it seem like people are making things happen.

Von der Leyen: please please don't send all your investment capital to the US pleaseee doesn't make an upbeat and promising headline (but it would make me click)

[u/Prince_of_DeaTh → u/loulan]

You're missing that it’s institutional money, not retail. European pension funds send hundreds of billions to Wall Street simply because our 27 fractured markets lack liquidity. Fix the regulatory fragmentation, and that massive pool of capital finally has a reason to stay.

[u/PalantirImperator → u/Prince_of_DeaTh]

It still doesn't on its own give them a reason to stay, unless those investors expect growth to beat the US companies and indices these institutions are currently invested in. Japan, where I live, has tried this for years, to get their famous "wall of money" out of cash and into the financial markets with tax-incentives for investing in equity markets- but it failed to stimulate the Nikkei because all it did was push tons of money into foreign equity funds that track the S&P 500- because that's where the growth has been.

Fixing the regulatory fragmentation is nice, but absent the expectation of growth that's competitive with the US (or some other form of protectionism that punishes people for sending capital abroad), it's not going to make a significant dent. Capital markets are global now and the money will keep flowing towards where markets foresee the most growth.

It still seems like a great idea though- can't hurt.

[u/br0wntree → u/PalantirImperator]

Size does matter when it comes to capital markets. It is one of step many but reducing fragmentation and increasing efficiency will help even if the it is small.

[u/SpacePontifex → u/PalantirImperator]

Agree with you but it’s a step in the right direction. Hopefully people realise more and more nowadays that we need to position ourselves as a competitor to the US.

[u/87utrecht → u/loulan]

Instantly making sure that money stays within the EU would be shooting yourself in the foot because europe also owns those american assets. Letting all the money leave europe is also shooting yourself in the foot. So it has to be done slowly.

[u/Ornery_Past6670 → u/Jaeger_Meister_]

Its not just about funding. One big reason Europe has fewer Big Tech giants is its takeover culture. Successful European companies are often bought before they become global champions: DeepMind was bought by Google, Skype by Microsoft, Shazam by Apple, ARM by SoftBank, and Minecraft developer Mojang by Microsoft. Booking.com started in the Netherlands but ended up under an American parent company. The UK is probably the worst example, with major tech companies repeatedly falling into foreign ownership. Meanwhile, the US is much more protective of strategic industries and foreign ownership. Europe clearly has the talent to build world-class companies, but too often it sells them before they can become the next Google or Amazon. Europe needs stronger rules and industrial policy to help its own companies scale and remain European.

[u/GrosBraquet → u/Jaeger_Meister_]

There is barely tech and AI because our investment climate is not great.

It's far from that simple. There are multiple other hurdles. Privacy laws. The EU is still too fragmented too. etc.

[u/Millibona → u/Jaeger_Meister_]

Look at what US tech giants are doing right now. They are building dozens of gigantic data centers that need so much energy that they are also building their own gas power plants.

There's literally 0% chance that any of this could happen in Europe.

When a company tries to build anything here, we first have to check if any rare rodents are living on the construction side. If we find as much as a single poop, construction is halted until every last rodent is rescued, wined and dined.

Then we need to get around 20 left-wing extremists out of their shitty tree houses that they are barricading themselves in to protest against who even knows what.

After that, there's 50 NIMBY grandmas that don't want any changes to their town, which means another 2 years of delays while the issue is negotiated in court.

The harsh truth is that our current system is not designed to allow rapid expansion or growth at all. It puts the environment and people above everything. Which can be a good thing in certain situations, but we have to be honest with outselves and admit that it costs us dozens of billions in growth every year.

[u/Harbinger2001 → u/loulan]

Having one large market instead of many smaller ones does actually make a huge difference to liquidity and capitals flows.

[u/kenyard → u/Harbinger2001]

IPO on all European exchanges at once. More demand better chance of higher valuation etc

Makes sense tbh

[u/mangalore-x_x → u/loulan]

It is a self reinforcing cycle due to the simple fact that all the money is flowing to the US => US can scale => money flows to US

Alos ETF and so on are about the most passive investment ever and not where tech comes from, it is where you groom already big companies that dominate the stock indices.

[u/Mdiasrodrigu → u/mangalore-x_x]

Even just now - to give some perspective - I follow the stock of Eutelsat which was bound to substitute Starlink in Ukraine last year when Elon was bullying them.

Right now three hedge funds are destroying the stock value of the stock and making money of it (Citadel, Qube, and Millenium Management) by shorting it.

What do the Europeans do ? Send money to SP500 and hope the American businesses prosper WHILE they keep trying to bust their European competitors, it’s a sad reality.

Most investors spend time sending money abroad while preaching for a stronger Europe. It doesn’t work like that

[u/upvotesthenrages → u/Mdiasrodrigu]

Most investors spend time sending money abroad while preaching for a stronger Europe. It doesn’t work like that

I mean, it's also about growing your wealth.

If you put your money in a European fund you'd perhaps make 3-7%, while the S&P500 is at 10-15%.

At the end of the day the owner of said value would be Europeans, so when they sell it they pull the money out of the US.

But I think this is a great initiative. The EU's fragmented financial markets are a pain in the ass for anybody looking for funding.

This is just the first step. I'm sure that once certain hindrances have been overcome then countries and the union will streamline others.

[u/Wonderful_Code5929 → u/loulan]

You are right, but you forgot one thing: capital markets union allows big IPO in Europe. Size matters. Innovations will be developed AND IPO pushed in Europe. Real innovators will stay rather in Europe

[u/odis69 → u/Wonderful_Code5929]

You keep telling yourself that and let’s check back in ten

[u/hardolaf → u/Wonderful_Code5929]

No, real innovators will leave Europe for anywhere with a saner tax code in terms of how they handle stock options and restricted stock units. What's the point of taking a principled stand if the governments of Europe would seize your home to pay for the taxes you owe on an imaginary stock valuation while you have no ability to actually sell any of the asset to cover your taxes? You might as well move literally anywhere else and avoid the issue all together.

[u/kaisadilla_ → u/loulan]

This is how I see it, too. The money I have for investment goes into S&P500 not because I love the US, but because I care about my bank account. Our tech industry simply isn't there, SAP is the only company worth mentioning and SAP would be just another tech company in the US. And it's not due to lack of talent, since American companies are flooded with European software engineers of all kinds.

[u/castlite → u/loulan]

It’s about not having your money in a hostile, untrustworthy nation. That’s it.

[u/Chataboutgames → u/castlite]

But that's not what this accomplishes that. People can already invest in all Europe ETFs if they want to.

They generally don't want to for most of their savings.

[u/Prince_of_DeaTh → u/loulan]

You’re confusing cause and effect.

Europe doesn't have trillion-dollar tech giants because European capital markets are so broken and fragmented.

European startups produce plenty of incredible tech (DeepMind, Skype, BioNTech, ARM, Mistral), but the moment they need €100M+ in growth capital or an IPO, European markets can't supply it. They are forced to pack up, move to the US, and list on NASDAQ to get funded.

Furthermore, the €300B outflow isn't retail bros buying ETFs on an app, it's massive institutional pension and insurance funds fleeing 27 different sets of national regulations and insolvency laws.

The entire point of the Union is to fix that broken financial plumbing so European tech companies can actually scale in Europe instead of feeding US market caps.

[u/Top_Plan_35 → u/loulan]

The issue is that Europe, the UK etc actually has quite a lot of tech, but once it reaches a certain stage (typically Series B/C investment if VC-backed) the founders and companies simply have to move to America to get that much capital. Europe is too risk averse. This maybe goes some way to rectifying that, but will likely take a generation to get right.

[u/groovyipo → u/loulan]

Exactly! Money is going where the opportunity is. The EU is insanely over-regulated; running a business means endless reports, monthly tax filings, and being forced to waste massive resources on constant compliance filings that make you feel like you are always having to prove you are not guilty of something. Look, I am a very proud EU citizen and very patriotic about my country, but I have spent enough of my career so far in the US building companies on both sides of the pond, and it is just easier, faster, and more profitable to build on the US side. I still continue to build on EU side, because I guess I am a masochist, but EU bureaucrats don't get it - Europe is way behind because of very anti-business and anti-innovation regulations. If we want our precious euroes to stay in the EU, we need to make it easier for innovation and entrepreneurship to happen in the EU. I mean c'mon! I now have to file reports for how long my employees stand to the labor ministry. Give me an effing break!

[u/SignificanceWild2922 → u/loulan]

There are also companies that moves to the US because NASDAQ is better to raise capital ( for instance Pasqal, a french company specialized in quantum comptugin just did last week and it sucks )

[u/Sakarabu_ → u/loulan]

I suppose you need to ask yourself, are US companies flourishing because people in the US are inherently smarter and better at business? Or are they flourishing because of a chain reaction which started from a few American tech companies capitalising on advances in technology (or further back, from a massive boom post world war 2), which is perpetuated by people in Europe and the rest of the world continually investing in their companies and allowing them to maintain a competitive edge through massive amounts of free flowing capital?

Not really. We barely have any tech, which is where growth is. That's the actual issue.

And how do you expand our tech market? Do you think perhaps having more investment might help?

Markets are also a strange thing, sometimes just declaring changes and intentions to promote a market, can cause that market to boom. Very rarely these days do you need actual substance first.. just build it (declare it), and they will come.

[u/Charlesinrichmond → u/Sakarabu_]

They are flourishing because the US regulatory and capital markets regime is much better designed for success.

[u/ginger_guy → u/loulan]

Its more true to say that the EU lacks cutting edge tech because they cant get the cash they need to scale fast enough BECAUSE Capital markets are too fragmented and not flexible enough. Bank lending accounts for roughly 85% of corporate debt financing in Europe, compared to roughly 45% to 50% in the United States. US banks regularly securitize and package loans to sell into capital markets, while European banks tend to hold loans to maturity. The US can do this because the US capital market is unified under single federal regulations and supervision. Europe remains fragmented across multiple national exchanges, regulators, and post-trade systems, despite consolidation efforts by groups like Euronext. This results in venture capital and private equity funding depth in the US significantly outpacing Europe. This difference often forces high-potential European tech startups to move their headquarters or seek initial public offerings (IPOs) in the US.

Its an un-virtuous cycle:

1. Promising new Tech company is created in the EU
2. Available investment capital is localized to country of origin and stuck with inflexible bankers
3. Companies are forced to choose between moving to the US where money is faster/more fluid or risk being outpaced by international competition.
4. The limits of local cash lower the overall potential returns to invest locally and it makes MORE sense for financial institutions to invest in the US where the returns will be higher.

This is why so many new companies in the EU fail to mature in the same way they do in the US.

[u/johnmcdnl → u/loulan]

The US doesn't just have more successful tech companies and therefore attract more investment. A big part of why these companies end up in the US from the early days is the capital markets.
More available capital makes it easier for high-growth companies to raise huge amounts of money and scale. Successful companies then generate strong returns, which attracts even more global capital into US markets, making those markets deeper still.

And so the capital markets are also one of the reasons it has been better at creating and scaling those companies in the first place. Companies tend to be fine at getting Series A funding, but it's when you start rolling into the Series B/C/D funding when you start needing 9 figure investments - that's when the Euopean capital markets start struggling big time. Whereas the US markets gobble it up, and spit out the high growth at the other end.

And the obvious irony here is that European savers indirectly help buying US tech stocks, giving US capital markets the exact liquidity they use to buy up or outfund European startups.

The EU making a strategic attempt to reverse or slow down this trend, and to foster an environment that makes setting up high growth companies to couteract the USA's dominance is answer to why there's barely any tech in the first place. And so if you want to fix the 'lack of tech/lack of growth stocks' - you have to answer the question around the size and scale of the capital markets in the region.

[u/Epyon_ → u/loulan]

You don't think $300 billion a year can start to change that?

[u/zth25 → u/loulan]

The stock market is small compared to the bond market. This is probably more about institutional funds and investors, like the pension funds that manage the mentioned savings. They have to play it safer and put much of their money into bonds.

[u/MysteriousOption5462 → u/loulan]

I have two stock portfolios. One in my country, one in the USA. If I want to invest in Finland, Estonia, Ireland, it's a hassle. I can roam, work, get healthcare, pay in Euros in all those countries but not easily invest in their stocks.

It's not enough to solve the problem but it's still a good thing.

You are right to say that money flows to the USA from Europe and Japan due to their high growth economy but hopefully in the future more tech will emerge from Europe. We started late but with each new generation of entrepreneurs with exits, the ecosystem grows.

[u/Hinx_art → u/loulan]

we have shit loads of tech, but once they get to a certain size American tech and venture capital buys it out and dismantles it.

[u/Charlesinrichmond → u/loulan]

This in a nutshell, it's not hard to invest in Europe. It's that people don't want to because they don't think they're going to earn enough money.

[u/Unique_Tap_8730 → u/loulan]

How do you propose we get tech with so little investment? Its going be very hard to replicate the investment enviroment Silicon Valley has been able to operate in but Europe has no choice but try. This is one small step in the rigth direction. But to really make a difference Europe needs to coordinate its tax structure to strongly incentvise european stock investments over property investments.

[u/Some_Vermicelli80 → u/loulan]

US growth is going to face a wall not seen for a 100 years. Investors are pulling out. Not the comedians on stock market but rather the real ones. No one believes US can sustain this debt growth. Even insurance on Nvidia's default has doubled in last 2 months. It's going to be brutal.

[u/Diddly_eyed_Dipshite → u/NeckFederal3462]

So does this mean theyre going to change the taxation on capital gains too? Currently its super confusing between different EU countries, and with some brokers you need to sell your entire portfolio and rebuy if you move country which isnt any good, investment tax ranges from 0% to 35%.

[u/kenyard → u/Diddly_eyed_Dipshite]

The tax is the same regardless if you invest in Europe or us.

You are correct the taxation is weird though for people who move around

[u/throwaway586054 → u/kenyard]

>The tax is the same regardless if you invest in Europe or us.

This is incorrect, it really depends of the country, the domiciliation of the funds, stock etc. And your country may have also special taxed products like in France with the PEA or PER.

[u/Zirkulaerkubus → u/kenyard]

Could be changed to less tax for capital gains on EU stocks.

[u/Aggressive_Body834 → u/Zirkulaerkubus]

EU can't change national parliamentary taxing prerogatives.

[u/Juandimix → u/Diddly_eyed_Dipshite]

Indeed, for example Germany taxes Unrealized gains and the % changes between ETF, Bond, Stock, Crypto, it also taxes differently if the ETF has too many non stock assets, how are they going to standardize everything between countries?

[u/Greedyanda → u/Juandimix]

Germany only taxes a portion of unrealised gains from accumulating or low-distributing investment funds and ETFs, not stocks. And this is deducted from your gains when you liquidate them.

[u/pengekcs → u/Juandimix]

That's really effed up.

[u/TheKensei → u/Diddly_eyed_Dipshite]

Yeah it should be incentived by tax return

[u/BaggyOz → u/NeckFederal3462]

I can't see this changing anything unless their new EU index fund starts outperforming the S&P500.

[u/MoffKalast → u/BaggyOz]

I mean if they can roughly match it, and guarantee that there won't be any SpaceX-style mandatory bag holding involved, then it would be a decent alternative to avoid the risk brought on by raging lunatics overseas.

[u/siazdghw → u/MoffKalast]

"if they can match it"

That's the whole issue, the EU has underperformed the US for decades. That's entirely why people and hedge funds in the EU buy into the US market, because the returns are historically way better except in the last few years.

[u/n00b678 → u/BaggyOz]

Past performance does not guarantee future returns. And it's easy to see the tide shift. American stocks have much higher P/E, meaning the expected returns for them are lower. Add to that all the tariffs and other market uncertainties under Trump, the AI bubble, regulatory shenanigans we've seen with Space X IPO and suddenly Europe starts looking much more promising.

[u/Charlesinrichmond → u/n00b678]

I've been reading some variant of this for 30 years. So far, it hasn't panned out because it ignores the regulatory burden in Europe.

[u/keralaindia → u/Charlesinrichmond]

Only comment that gets it. Europe is a regulatory hellscape for individual companies. And not in some anti environmental way either. So many different rules and anti-business legislations. The US has a significant advantage being a federation of states.

[u/Schlummi → u/keralaindia]

If this would be the main factor, then the EU would have a suffering industry and the US would do well.

In reality its rather the opposite. Europe lags behind in "tech" - but its "traditional industries" perform well.

[u/imp0ppable → u/BaggyOz]

https://finance.yahoo.com/quote/EUSC/

Did 14% this year, not too shabby. There are others as well.

Still if the US AI bubble pops these will all head down anyway, nowhere to hide really.

[u/Ok-Leading6971 → u/BaggyOz]

The S&P is rising largely because of EU money. And then it attracts some more EU money because it is rising. Once that circle breaks, STOXX will outperform

[u/njuffstrunk → u/NeckFederal3462]

How though? The European savings are directly invested by financial institutions and I can't see them voluntarily implement this not to mention the repacking of these assets which obscures the 'origin' of them (global ETF's for instance).

It's a great idea but implementing it doesn't seem straightforward.

[u/0k0k → u/njuffstrunk]

Right now each country has it's own rules and system, meaning a medium sized company in France can effectively only raise capital in France. Going to e.g. Germany means navigating a different set of rules. That's partly why so many companies go to the US to raise capital. There's a lot of money flowing in that one market, much more than in any given EU country.

This is about creating regulation to standardize rules across the EU to form a single market that can better compete, much like has been done already for trade or movement. There's nothing about how to force implementation, it just changes the incentives. It makes it easier for financial institutions to invest across the EU as a whole. It makes it easier for EU companies to stay and raise capital here instead of setting up in the US. Of course there will still be companies going to the US, there are no restrictions. But the goal is to have more stay in the EU.

[u/Skiffbug → u/0k0k]

In the end, the solution is federalisation. Have one single EU-wide stock market. This requires that the countries align or regulation for this, but it would be a game-changer.

[u/Tulaodinho → u/Skiffbug]

I seriously don't see that happening. Americans feel "American", Europeans don't have that common identity. It is a major obstacle

[u/Lallis → u/Tulaodinho]

Stop looking at the US for what a federation is supposed to look like. We are free to shape our union the way we see fit.

[u/Tulaodinho → u/Lallis]

You are not getting the issue though. Its not about the USA, its about us. Why should a German get shafted for a Spanish, or vice versa?

[u/EaLordoftheDepths → u/njuffstrunk]

Example: I live in Finland - the only realistic stocks I can buy without inconvenience is from Nordics, Germany or France - or outside of Europe.

It's easier for me to buy Toyota stocks than Orlen. Basically none of south/eastern Europe is easy to invest into.

[u/SendoTarget → u/EaLordoftheDepths]

Also if you're buying anything that pays a dividend within EU, even with double-taxation treaty only Nordics (besides Norway) automatically applies it so they don't withhold funds. With Germany also you need to go to their official sites and ask for the extra to be returned and that process can take years....

[u/UnblurredLines → u/SendoTarget]

Germany and behind the curve on tech convenience/automation, name a better combo.

[u/qiwi → u/SendoTarget]

And ironically even it takes years it's not because of good control, you can lie about it and defraud eus for billions. This was the CumEx affair (hehee).

[u/Zirkulaerkubus → u/EaLordoftheDepths]

I'm in Germany where we have quite a few local stock exchanges, and this is wild. Some of them have Orlen, some don't, and the main exchange in Frankfurt only has it as an ADR.

[u/MrPuddington2 → u/EaLordoftheDepths]

Basically none of south/eastern Europe is easy to invest into.

Try to invest in China - it is always expensive and always difficult.

Making it difficult to invest is a choice.

[u/radek277 → u/EaLordoftheDepths]

trading 212 or degiro is not working in finland?

[u/CuriousButNotJewish → u/radek277]

It is, these people don't understand how tax regimes work. If you're a Finnish resident, you can buy anything through Trading212 (which has HQ in Germany) and you'll pay tax only the way Finland charges tax.

I live in a country where no capital gains tax exists, so for example, I pay nothing, and I can buy any shares I want through Trading 212.

The obstacle is that some trading markets perceive fees for transactions. I bought some French stock a while back and I had to pay a fee on it to finish the transaction, which, yeah, why would I buy any French stock when I can buy UK stock for free lol.

[u/Soepkip43 → u/njuffstrunk]

Currently the US offers a tax reduction on capital gains for US based startups, requiring the startup to move to the US for the investors to get this tax break.

Startups need money, so the investors say "incorporate here and we will give you the investment you are looking for" and the company moves overseas to the US.

By homogenized EU rules, this is something that could be done here too.

Unfortunately it is a race to the bottom when it comes to taxation of capital gains.

[u/Pheanturim → u/njuffstrunk]

It won't be voluntary, it'll work a bit like the UK savings and stock accounts which allow a certain amount of cash to be saved but others invested into UK stocks. There will be legislation around it which will force banks to use money in European savings accounts to invest in European companies. At least that's what I'd imagine

[u/Knee-Awkward → u/Pheanturim]

I live in the UK and as far as I am aware, such limitations on restricting some investment only to the UK are still only just rumours and discussions and not a real law. But even here the opinions on implementing such a law are mixed. People dont want to be forced to invest their savings into a worse asset just because its british

[u/njuffstrunk → u/Knee-Awkward]

Right exactly in essence this comes down to some form of capital control and a lot of people are ideologically opposed to this. Not to mention the lobbying power of financial sector.

[u/GergDanger → u/Pheanturim]

The U.K. thing you said isn’t true. I can invest into any company I want through my stocks and shares ISA up to £20k a year.

[u/Ok-Style-9734 → u/Pheanturim]

Which acounts fo you think force you to invest in uk companies?

The ISA changes were just about interest on cash in a stocks and shares isa no rules about it having to be in the uk.

[u/Diligent-Bowler-1898 → u/Pheanturim]

That along with presenting a more competitive shared capital market hopefully. We need our own Brussel Street, hopefully UK can get included somehow, they have a lot of expertise in the area and good companies to invest in.

[u/Aggressive_Chuck → u/Pheanturim]

This sounds like a massive misallocation of capital.

[u/propercare → u/Pheanturim]

AFIK there is no problem with funding of EU companies but their competitiveness on global markets. The whole idea that was now promoted looks like a political bluff.

[u/fuscator → u/Pheanturim]

This doesn't exist in the UK as far as I know, and I hope it never does.

[u/Pheanturim → u/fuscator]

I misremembered something that was suggested I think around the last budget. However the point stands to enforce this you'd need legislation

[u/niteninja1 → u/Pheanturim]

that basically got scrapped

[u/Nero_Drusus → u/njuffstrunk]

I think the intent is usually to make it easier /more attractive to invest in pan European assets, rather than the current fragmented mess.

That means greater inflows, due to less friction, creating investment/growth, raising asset prices, increasing the attraction of investing and hopefully setting up a positive flywheel.

[u/PmMeUrTinyAsianTits → u/njuffstrunk]

but implementing it doesn't seem straightforward.

Imagine if healthily managing the world economy required work that wasnt straight forward

Fortunately all of the worlds problems and solutions fit in a tiktok soundbyte, so this is a super relevant issue.

[u/Desert-Noir → u/njuffstrunk]

Tax capital gains at a lower rate?

[u/neosatan_pl → u/njuffstrunk]

It's not about enforcing it, but to keep/move companies in the European market. This way it will be possible to create European indexes which can be invested from within Europe.

Let us take an example of Spotify. It's Spotify AB, a company registered in Luxembourg and operating from Sweded, but trading at NYSE. If they would move to an European exchange and have the same easy of rising capital as in US, then it's a win for the company from many angles.

So, the bar that EU has to clear is for make is easier to rise capital at home than in US. Not enforcing that a company is traded at home.

[u/Pulga_Atomica → u/njuffstrunk]

Double the capital gains tax on money invested in Trumpistan (just call it abroad) compared to money invested in Europe.

[u/redzin → u/NeckFederal3462]

Does the EU have the companies? Also, even if it does, I am already exposed to European success or failure because I live and work here. Investing in the US (broadly) is diversification and risk management.

[u/Pale-Stranger-9743 → u/NeckFederal3462]

SIUUUUUU

[u/Habba84 → u/Pale-Stranger-9743]

Ronaldo was way ahead of his time.

[u/alaslipknot → u/NeckFederal3462]

If they can provide investment options that will have the same or better return than the US then people will automatically do it.

 

The goal is to make it easier for Europeans to invest across the EU

never been a real problem imo

European companies to raise money from European investors.

Yes this can be improved.

But the real issue is is European regulations, as long as entrepreneurs are not allowed to innovate and do things as fast as they can do it in the US, the problem won't be solved.

[u/J0hnGrimm → u/alaslipknot]

Knowing our governments they'll just slap us with an additional tax when we're investing in foreign stocks.

[u/sookaisgone → u/J0hnGrimm]

Don't give them ideas ffs, that woman in the video will use that for sure.

[u/keralaindia → u/alaslipknot]

Only comment that gets it. Europe is a regulatory hellscape for individual companies. And not in some anti environmental way either. So many different rules and anti-business legislations. The US has a significant advantage being a federation of states.

[u/ProudGrognard → u/alaslipknot]

How are they not allowed? What is specifically holding them back, regulations wise?

[u/alaslipknot → u/ProudGrognard]

I mean more generally that the US usually allows companies to move faster and take more risks before regulation catches up.

You can see it with things like self-driving cars, AI, drones, biotech, weapons, etc. In Europe the instinct is often to regulate earlier and more heavily.

 

The EU is promising to cut bureaucracy, simplify overlapping rules and reduce administrative burdens, But they are not promising to become a US-style light-regulation economy. The Commission repeatedly says simplification should happen while maintaining its existing standards on safety, consumer protection, environment, fundamental rights, etc.

 

And just because of that, money will simply move more toward the US, you may argue its "more ethical" to invest in Europe but when did that argument ever won a debate :p ?

[u/MrSoapbox → u/NeckFederal3462]

I wish the UK never left the EU. The EU is so much stronger with the UK in it, and thanks to Trump, I think it would end up with few left wanting to side with the US and the UK likely would have become fully into the EU project. That in turn would have helped pull in Canada, Australia and NZ with closer ties (although I don't see Australia abandoning US military hardware) but with Canada's and Australia's natural resources, and the UKs financial sector the EU could be cushioned a lot better than anything both the US and china could throw at it. I think even SK and Japan would integrate a lot closer and that would be unstoppable. It's a real shame. The investments would be insane

[u/Aggressive_Chuck → u/MrSoapbox]

This sort of thing is only happening because the UK left. When we were in, they didn't want a single financial market because it would benefit London.

[u/No_Ad1286 → u/Aggressive_Chuck]

I think plans for unifying the capital markets started before brexit

[u/Remarkable-Oven-2938 → u/MrSoapbox]

We'll be back.

[u/bluelittrains → u/Remarkable-Oven-2938]

I don't see it happening until the migration crisis in both Europe and the UK is solved. Until then the far right will continue to hold a lot of power unfortunately.

Maybe if Trump actually does something as stupid as invading Greenland or take the Falklands it could be a catalyst for European unity. But I doubt it.

[u/wndtrbn → u/bluelittrains]

Na the far right will always find a group to demonize. The idea that there is a migration crisis is hogwash to begin with.

[u/Psyc3 → u/wndtrbn]

The UK had the highest immigration rate in 2023 since the 1950's, even now the illegal immigration rate, so not the total net immigration rate is relatively close in amount to the total net migration rate in 2017-2021. The illegal immigration rate is very similar to the total migration rate per annual from 1975-1995.

This is why the Right have correctly at this point won the argument, the Right wing were once going on about whatever, but facts are they are now just correct. If you had a negative immigration rate of 100,000 a year, bearing in mind the immigration rate from 1975-1995 was less than 100,000, 100,000 is a perfectly reasonable figure, positive or negative, to get back to the same population as 2020, only 6 year ago, would take 23 years. There was a year where 800,000 people were imported...

All while there is the highest youth unemployment rate since the 2008 recession the biggest recession in 100 years. That is caused in part by immigration.

The whole system and country is screw, and part of that is because of immigration, just from an economic point of view. We aren't importing the best and brightest, a lot are unable to speak English, and their education level is below even a basic standard for a modern Western economy, let alone a liberal social country (which of course the right wing are against as well).

[u/NotGoodSoftwareMaker → u/wndtrbn]

The far right is demonising the data, interesting take

[u/CuntWeasel → u/wndtrbn]

The idea that there is a migration crisis is hogwash to begin with.

Buddy, what year is this? Denying data-based facts and calling people names is so 2021 and passé.

Go outside and check for yourself.

[u/55Media → u/bluelittrains]

The far right (Russia) is causing it

[u/ensoniq2k → u/NeckFederal3462]

EU should also make it easier to create new companies. Those packaging and electronic waste laws are a huge slap in the face for small startups.

[u/AdonisK → u/ensoniq2k]

They are already working on this. It’s part of Draghi's report

[u/PetraLoseIt → u/NeckFederal3462]

As an individual investor from Europe:

• I am now paying small extra fees if I want to invest in a stock that is on the Italian exchange in Milan vs a stock that is on my "home" exchange in Amsterdam. So I generally speaking tend to invest at the Amsterdam stock exchange which means I cannot directly invest in some individual stocks that are not for sale at the exchange in Amsterdam (but are for sale on say the Italian or German exchange).
• However, over 90% of my investments are in low-fee worldwide index funds and ETFs. And I think it is smart for me to be invested in an all-world fund, so I will not change that to an alternative that is "only" all-Europe. Those index funds and ETFs do already exist, by the way.

[u/osgili4th → u/NeckFederal3462]

I feel this is gonna make a lot of US companies to worry. Even if not all the 300 billion of euros are gone, it will be much less than that. And currently tech companies and the military are the two things that are sustaining the US economy, and a lot of it depends of investment from other countries.

[u/Dear_Chasey_La1n → u/NeckFederal3462]

So... they are not going to spend 300 USD billion a year on US investments?

I can't read it differently, and to me it makes perfect sense. Not just savings, how about pension funds they are sitting literally on trillions, a massive chunk goes into US bonds and US companies, I think it's not unreasonable to look in how safe those investments are. Take SpaceX these funds must invest in them, I find it mindblowing that nobody steps up and says.. maybe we better sit this one out.

The average American (and european) has no clue how much the EU invests in the US through various channels. With risk increasing and the US behaving like a retard, the EU should reposition itself. I'm not arguing EU first, but at least be prudent and don't be afraid to speak with your wallet.

[u/UISystemError → u/Dear_Chasey_La1n]

There is potential for up to €300 B to be redirected into European investment opportunities.

That does not mean it will all automatically stop flowing to the US.

Europe is doing what needs to be done to turn the fragmented 27 financial markets into a single financial market and attract that €300 B.

Currently, the US attracts the capital because it’s one financial market and makes capital investment easier.

Now it’s our turn. Every step is a move towards recreating the ease of access the US has in practice.

[u/notintelligentidiot → u/UISystemError]

The US being a single financial market and making capital investment easier is not even half the reason the US attracts far more capital from the rest of the planet than Europe does… the US also just has so many more globally successfully businesses and they seem to adept well across different eras whereas most big European businesses seem stuck in stasis.

Like, it’s not even close…

Europe has to compete more with Asia before it could ever step anywhere near the level of the US.

[u/outsideshot → u/notintelligentidiot]

Very true. And at the same time the US is also poisoning the very attributes that made it such an attractive destination for capital investment.

[u/Misfiring → u/Dear_Chasey_La1n]

You're talking as though the people sitting in the EU HQ is managing all EU investments.

There is no single position or stance for investment in the EU. This isn't China. If some companies within the EU doesn't want money into Space X, they are free to do so by withdrawing from NASDAQ, while still keeping money in SP500.

[u/1988rx7T2 → u/Dear_Chasey_La1n]

Don’t invest in SpaceX? Yeah Musk is an asshole, but God forbid EU organizations invest in new technology. I know, let’s put pension Funds into Volkswagen! That will be a huge return on investment!

[u/amenotef → u/NeckFederal3462]

What are they gonna do? Add some ridiculous tax like recently done with low value articles purchased from abroad? So more tax on people's freedom?

I just paid 3€ new tax for a 1.5€ article (70mm adhesive round disc) that I need to install in my car. And another 3€ for a 3€ SATA adapter to convert from M.2 to normal SATA.

[u/derinus → u/amenotef]

They tax us so hard there is no room to flourish. Tax Income, tax VAT, tax food, tax energy, tax gas, tax inheritance, tax having a house, tax driving a car, tax sewers and just owning a trash bin, tax import.

But when someone says raise tax on wealth. EU commission goes. "No no no no no no that our money"

[u/samplebeast → u/NeckFederal3462]

Cheers 👍🏼

[u/Shirolicious → u/NeckFederal3462]

Looking forward to see what this will look like in practice. Our own country has some crazy idea’s thst are so extreme that I am personally looking forward to EU standards that are equal across all EU countries and hopefully also are reasonable.

[u/Pioustarcraft → u/NeckFederal3462]

Because the S&P yields more than EU markets. The problem is also that EU unicorns are relocating their HQ to the US.

Then we have countries like Belgium that tax both dividends ( 30%) and capital gain (10%). The Netherlands who wanted to tax unrealised capital gain etc...
So much taxes that investing is not attractive compared to the US

[u/icebraining → u/Pioustarcraft]

If investing wasn't attractive there wouldn't be so much European money in the US stock market, since those taxes apply to it too.

10% is hardly a high rate, in a US state like NY you can easily pay more than double.

[u/SimpleMoonFarmer → u/NeckFederal3462]

They want to make it easier, with more regulation.

I'm not sure they have thought this through…

[u/EggstaticAd8262 → u/NeckFederal3462]

So this is basically a retaliation to America First and perhaps also to China, where Chinese companies are often heavily backed by the government.

So now, the US is closing on itself, and also Europe to some extent, though we still expand our trading partners.

I feel like this is what we must do towards the US. They are hurting us and everyone in the world economically and politically (if we don't distance ourselves from them).

Putin and Xi must be having a field day.

[u/TropoMJ → u/EggstaticAd8262]

It's not really about this. Regardless of how friendly the EU and US are, the EU can't afford for European investors to just indefinitely send all of their money abroad because it's impossible to invest in Europe. This is a huge part of the reason why we have no modern competitive companies. All the EU is trying to do here is make it so that it's not easier for European money to go to the US than it is to stay in Europe.

[u/EggstaticAd8262 → u/TropoMJ]

Is that why the big index etfs are like 65%ish American?

[u/t_baozi → u/NeckFederal3462]

Money flows to the US because they have the companies to invest in, not the other way around.

[u/LimeLoop → u/NeckFederal3462]

I don't think 5 year old me would have understood that, but 40 year old me does 😄 Thank you!

[u/JAXxXTheRipper → u/NeckFederal3462]

So this doesn't mean the EU is going to suddenly take €300 billion out of US investments.

It means they want to stop so much European money from flowing abroad in the first place

How are those not the same? What am I not understanding here?

[u/yomjoseki → u/NeckFederal3462]

The money is still going to leave because the corruption is in the US, which is where the money makes money.

[u/Justread-5057 → u/NeckFederal3462]

Appreciate the clear and concise overlook.

[u/gabynew1 → u/NeckFederal3462]

I've already divested as much as possible from US market. My principles are more important. I don't want my money to feed "animals" who see me as trash. The last few years seeing fortune 500 companies lining up to brown nose Trump and the atrocities around him as made me sick.

[u/Radiant-Courage5545 → u/NeckFederal3462]

Thank you for that, mate.

You explained that so well that my simple brain could understand. 😂👍

👏👏👏

[u/Glittering_Crab_69 → u/NeckFederal3462]

oh is this why they killed intra-eu shipping?

[u/Harbinger2001 → u/NeckFederal3462]

So working towards making the EU financial market just as big and liquid as the USA.

[u/rubiohiguey → u/NeckFederal3462]

You can be sure that very soon the Orange Man 🍊 will call a press conference to say the EU is taking (or even stealing) 300 billion dollars a year from his great big beautiful America

[u/Bronze_Rager → u/NeckFederal3462]

" Europe has the companies"

-lold

[u/-Against-All-Gods- → u/NeckFederal3462]

How does that go with the commitment to buy $750 billion in energents and invest another $billioj in the US?

[u/Cunning-bid → u/NeckFederal3462]

A new golden age for the European block, made possible by a retard on his golden toilet

[u/Abnatural → u/NeckFederal3462]

Hey EU, Canada would like to participate too please

[u/SpacePontifex → u/NeckFederal3462]

It’s frustrating it’s taken this long to get to this point. Will those of us in the uk benefit? More economic union is the only way we can compete against America.

[u/G_Morgan → u/NeckFederal3462]

If they want to stop outflows they need to change corporate behaviour. Cash outflows happen because European companies pay huge dividends. That depresses the price of European stocks and causes a rebalancing event for anyone being rational about their investing choices.

[u/AlternatePancakes → u/NeckFederal3462]

They tried to do this already and couldn't agree on a framework that would allow companies to operate under one set of rules all over the EU.

So the solution was essentially a new framework with few overlaps and mostly differences in how companies have to operate in different member states.

Ironically and in true EU fashion, adding to the problem it was meant to fix.

[u/sookaisgone → u/NeckFederal3462]

The EU wants to make it easier for the two to meet

Fucking give me something comparable to SEC EDGAR then.
Every freaking country here has is own fucking non-standardized system.
They are working on ESAP (European Single Access Point) and it should be online in a couple of years but is already late.

ESAP would be only the starting point.

[u/dustofdeath → u/NeckFederal3462]

Investments go where they earn the most.

EU companies have very poor performance and worse future outlook.

Why would you choose to invest in that and earn less?

[u/JumpingH24 → u/NeckFederal3462]

I work in the financial industry and the market is in dire need of something like this. So much in pensions, savings and investments go elsewhere simply due to the fact that there is no European equivalent. I hope this is set up and suitable funds are available through suitable providers.

[u/rightoftexas → u/NeckFederal3462]

It's funny to hear Europe complain about a trade deficit and demanding more capital.

[u/Rift80 → u/NeckFederal3462]

C'est juste un début de préparation à un contrôle des changes qui ne dit pas son nom, c'est pas encore cohercitif mais on peut y venir.

[u/AibofobicRacecar6996 → u/NeckFederal3462]

The capital market union isn't about retail investors, it's about institutional investors (at least I hope they didn't fuck it up so much to make it only about retail investors

[u/CompleteBrush9489 → u/NeckFederal3462]

I'll be damned.

Someone finally had a good idea and they all agreed to it ?

[u/JrSoftDev → u/NeckFederal3462]

This is, indeed, an infantilized explanation.

First and foremost, those "savings" are capital, and they are in the hands of billionaires and corporations operating in Europe. This is not about the common folk actual savings.

What is being done here is the creation and deployment of a system that intends to "compete" with others, including the US one. That means deregulation, exemptions, etc. And none of those 470 billion are guaranteed, at all. This is, in a sense, a profound and hardly irreversible race to the bottom - and a paradise for billionaires and corporations.

[u/slicerprime → u/NeckFederal3462]

I may be an American; but, I'm also very supportive of Europe being more self-supporting. I don't have any problem with the idea of Europe investing in itself. AFAIC a strong Europe is better for the US as well. Economically, militarily...everything. I would love to see the EU finally become what it should have been decades ago.

But, the problem I see with this is not the idea/philosophy itself; but rather in its implementation and potential for success. It sounds good; but honestly I don't see how it can ever go beyond just another impotent agreement on paper with little to no real world value.

Why? Because the EU (and its previous incarnations) is a union in name only. Until it finally drops national interests and federalises it will continue to meet, propose ideas like this one, nod sagely, vote, sign, declare...and then go home and do whatever the fuck they want to at home.

This agreement of twenty-seven nations is no different. Each of them has their own tax laws, their own economic priorities; all of which adds up to an agreement that looks good on paper but will be a nightmare to put into real practice.

Europe has the potential to collectively do exactly what this agreement suggests: Serve its own economic interests better within its own realm without relying quite so much on external markets. It can pick and chose better when to go outside and when to invest internally, all for the collective best interests. But, that's never going to work as long as the external markets (like the US) are both financially attractive and more easily navigated logistically. And right now, with every individual EU country its own set of rules and tax regulations, what financially responsible decision maker is really going to chose that regulatory nightmare over a far simpler and equally, if not greater, external market just because Brussels/Strasbourg says so? After all, like I said, until the EU really truly unifies and sets national interests aside, agreements like this one are just that...agreements. So what? Where's the weight. It's just another nice sounding thing on paper that means very little in the practical world.

Europe needs to get off its ass and stop inching toward unification and finally actually do it for real.

[u/Funny-Routine-7242 → u/NeckFederal3462]

i disagree. good companies find money or can get listed in the USA.

look at asml, siemens energy, dynatrace or whatever. 

forcing me to buy worse companies is dumb and actually burning money, inflating the market and making loser companies richer.

[u/landismo → u/NeckFederal3462]

She is saying that the saving must be to the service of the EU companies. With this over regulated behemoth that is the EU, it will never be more attractive than the US.

She wants to force your money to work to fix the companies the EU is destroying. This is hinting at making it hard to invest outside, ie, higher taxes on outside gains.

Si defiendes este tipo de discursos o eres un hijo de puta o un jodido ignorante. Os vais a cargar Europa entre tanto subnornal, vamos a dejar la URSS en una broma a nuestro lado.

[u/enbyratie → u/NeckFederal3462]

The Premier League special

[u/ViktenPoDalskidan → u/NeckFederal3462]

Can you ELI3 please? I only have a MSc in business, I’m no rock scientist.

[u/Ok-Leading6971 → u/NeckFederal3462]

This is only one part of the chain. Look at EU regulation and US regulation. Data privacy, transparency act, taxation, bureaucracy. All this halt innovation and more money won't solve these

[u/countAbsurdity → u/NeckFederal3462]

Let's start by creating european alternatives to the largest US or chinese monopolies.

[u/WeeklyPhilosopher346 → u/NeckFederal3462]

Awesome, thanks for that.