r/europe • u/paneuropeanism_ Europe • 13h ago

News 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

https://streamable.com/4h43qk
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u/Individual-Toe-1959 13h ago

Thank you!

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u/loulan French Riviera ftw 10h ago

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.

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u/Jaeger_Meister_ 10h ago

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

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u/PunkPirate56364 7h ago

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

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u/hardolaf United States of America 9h ago

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.

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u/Hutcho12 9h ago

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.

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u/Graham110 9h ago

Netherlands or Denmark I think 🤔

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u/Top-Squash6558 8h ago

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.

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u/chard47 4h ago

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

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u/Sensanaty 4h ago

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.

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u/Portugearl 1h ago

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

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u/Exciting-Ad6897 1h ago

Go live there and the more you know the place the better you’ll know the flaws. In some aspects it might be better than other European countries, perhaps the one that you “name” could imply.

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u/RenderedMeat 3h ago

From my understanding, in 2028 the unrealized tax will get much worse. Instead of an assumed 6% gain they tax 38% on currently, it will be actual (unrealized) gains you will be taxed 38% on.

https://news.bloombergtax.com/tax-insights-and-commentary/week-in-insights-dutch-unrealized-gains-tax-is-a-surprise-reform

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u/smokesick 13m ago

Isn't it all box 3?

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u/FemFiFoFum 7h ago

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.

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u/Infamous_Thought_189 3h ago

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.

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u/1PickNick 56m ago

IIRC, since 2010 the Danish stock exchange has lost half its companies. The world’s highest tax on investors, combined with recurring annual taxation before realization, is a clear message to companies and investors to stay away. The 10 largest Danish listed companies are all more than 50 years old. Denmark is primarily a body-shopper country with many mom’n’pop shops and all scale-ups moving abroad. Sweden OTOH has learned from their mistakes and instated a much friendlier tax regime, and is now a destination for many Danish startups looking to be listed. Most if not all successful startups are sold abroad.

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u/philomathie 4h ago

That's just not true though, not at all for the Netherlands. You're talking out of your ass.

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u/Top-Squash6558 1h ago

Fair enough, I’m not an expert on taxes in the Netherlands. It’s true for Denmark though.

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u/hardolaf United States of America 8h ago

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.

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u/Hutcho12 8h ago

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

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u/hardolaf United States of America 8h ago

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.

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u/Character-Second781 24m ago

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.

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u/Ingoiolo Europe 4h ago

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

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u/Hutcho12 3h ago

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

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u/CopperSulfateII Europe 7h ago

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)

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u/Hutcho12 7h ago

I don’t know why you think you should pay less tax on stocks when they’re given to you than cash when it’s given to you.

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u/MilkHaterNumber1 6h ago edited 5h ago

Because you can't buy groceries with stock. Instead just tax when you sell and therefore actually have cash. This isn't complicated.

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u/Foreign_Telephone349 6h ago

Because it helps drive investment and innovation…people that owe a massive tax bill on illiquid private stock options are just going to move abroad to more business friendly countries, like they currently do.

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u/CopperSulfateII Europe 5h ago

You should ask your friendly neighborhood llm to explain: Employee Stock options (ESOP), Exercise, Strike, Tax on spread, Tax on sale, FMV, Cashless exercise on exit. 

It'll help. 

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u/Strange_Formal Sweden 1h ago

This is not true at all. Google "Sweden ISK"

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u/Own_Refrigerator_681 4h ago

Portugal used to tax stock options until recently. I still haven't been able to sell stocksi got from a startup that never had an exit event and I already paid thousands in tax. I'll probably never recover that money...

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u/Ingoiolo Europe 4h ago

Germany, for example

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u/Hutcho12 3h ago

You pay on vest in Germany.

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u/beerdude26 8h ago

Netherlands has it but I believe it's going to change in a few years

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u/RenderedMeat 7h ago

But so far the proposal is worse, not better. Currently they tax on an expected gain of 6%. The proposed change is to tax based on actual unrealized gains, which could be much more than 6% (and much less in some years).

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u/beerdude26 6h ago

Oh I thought it was on realized gains

Lmfao taxing on unrealised gains 😂

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u/cyaniod 54m ago

Ireland. It's called deemed disposal. After 7 years of owning an etf you will be deemed to have disposed of a the asset and as such pay CGT.

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u/EarthTwoBaby 9h ago

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.

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u/hardolaf United States of America 8h ago

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.

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u/EarthTwoBaby 8h ago

why is an american talking like they're a european tax expert ?

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u/IndependentMemory215 2h ago

What European taxes do you pay?

Or are you familiar with every EU members tax policies?

It is quite possible to google something as well. It certainly doesn’t make you an expert, nor did the poster claim to be.

Are you saying he is wrong? If so, say that.

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u/Prince_of_DeaTh Lithuania 8h ago

That was a valid critique 5–10 years ago, but it’s largely outdated now.

Most major European tech ecosystems have overhauled their ESOP taxation (the Baltics, France's BSPCE, the UK's EMI, and recent reforms in Germany and Spain) to defer taxation until actual liquidity/exit events.

But more importantly: even in countries with top-tier stock option regimes (like Estonia), startups still have to move to the US for Series C/D funding because European capital markets are too fragmented to provide late-stage liquidity. Fixing talent incentives means nothing if there is no domestic capital deep enough to take those companies public.

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u/Charlesinrichmond 7h ago

It's not as simple as lack of capital. There is a phenomenal amount of European capital that gets invested in the US.

The issue is the incentives.

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u/Prince_of_DeaTh Lithuania 7h ago

Exactly, we have the capital. But European money defaults to Wall Street because navigating 27 different regulatory regimes makes local investment a nightmare. Integrating our capital markets is literally what creates the incentive for that capital to stay and fund domestic scale-ups.

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u/Charlesinrichmond 7h ago

Integrating the markets is well worth doing, but no one I know who invests capital worries about it. They only worry about the returns.

Europe's primary issue is downstream from the markets.

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u/Prince_of_DeaTh Lithuania 6h ago

That’s because returns don't happen in a vacuum. Valuations and returns are driven by liquidity, scale, and low transaction friction. Investors care about the final number, but that number is the direct result of having an integrated market backing the companies.

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u/konstantin_gorca 4h ago

Rest of the world? I mean, only US and China. You are completely right, but you make it seem as if we are competing with Zimbabwe

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u/hardolaf United States of America 3h ago

Europe and the USA is competing with China, Japan, South Korea, Israel, Nigeria (in 10 to 20 years), South Africa, Brazil, Canada, the UK (unless they decide to rejoin Europe), India, Vietnam, Thailand (they are best in the world in several medical subfields already), Indonesia, Singapore, etc.

One country doesn't need to be better than Europe at everything to be a competitor. They just need to be good at one thing to be a competitor.

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u/konstantin_gorca 3h ago

I honestly don't see EU competing with Japan, Korea, Brasil etc. Not due to arrogance but due to them being individual countries and their populations and economies cant compare with those of EU. They can be compared to Germany, France, UK, Spain.. but EU as a block I see as having only competitors in China, USA (depending on administration, best thing for both would be cooperation) and Russia militarily. I could throw India in there, since I think its time is coming. Maybe I am wrong, idk. Time will tell.

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u/GlobalVillage30 2h ago

Totally agree - the taxes for entrepreneurs and the labour regulations are just too high - the US is a different planet. The issue is not capital.

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u/hardolaf United States of America 1h ago

The effective tax rates between the USA and the EU are similar. The main issue is when the taxes are owed. There's been some fixes in some EU nations, but there's still a lot of problems making it difficult to pay in toilet paper (pre-IPO stock).

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u/loulan French Riviera ftw 10h ago

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

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u/AssistanceCheap379 10h ago

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

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u/rezistS 10h ago

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)

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u/Prince_of_DeaTh Lithuania 9h ago

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.

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u/PalantirImperator 8h ago

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.

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u/br0wntree 6h ago

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.

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u/SpacePontifex 6h ago

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.

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u/siazdghw 23m ago

I'm sure pensioners will love it when they find out that their retirement money was forced into a historically worse market, rather than a historically better returning one.

When the pension payments get reduced due to worse performance, I'm sure the pensioners will be glad to hear their money is going to Aldi and Lidl instead of Amazon.

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u/87utrecht 9h ago

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.

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u/Ornery_Past6670 8h ago

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.

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u/Sensanaty 4h ago

There's also a discussion of whether we even want corporations to be that large and powerful in the first place. IMO no corporation the size and power of Apple, M$, Spotify, Amazon or even Booking (and I work next door to their AMS offices!) should even be allowed to exist considering their outsized negative influence on the rest of the world.

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u/Appropriate-Bird-354 1h ago

None of this is true.

The EU is much more restrictive with foreign acquisitions and has much more complex processes to manage it than the US does.

You can point to plenty of American companies bought by EU tech companies, and EU acquisitions blocked by European regulators.

None of them were going to become the next Google or Amazon, even if only because the EU doesn't have the economic juice. It's a much smaller, less profitable, less productive economy.

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u/GrosBraquet 10h ago

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.

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u/Millibona 6h ago edited 5h ago

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.

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u/Sensanaty 4h ago

...admit that it costs us dozens of billions in growth every year.

Growth to what end? Having lived in the US where I earned almost triple what I do in NL, I'll take life in the EU and the "stagnation" present here over the "growth" you experience in the US any day of the week. The EU isn't perfect and there's a discussion to be had about the bureaucracy surrounding it but to me it's infinitely preferable than the bullshit Yanks have to put up with.

The data center situation, for example, is a perfect encapsulation of everything wrong with the US when it comes to what they allow corporations to get away with. The AI companies propped by imaginary circular IOUs are rapidly expanding into areas that absolutely cannot sustain them. The power grids are struggling to begin with, and because monied interests have bought out everything and everyone they get unfair rates, subsidies and major tax reliefs while the populace is squeezed more and more. It's gotten to the point that it's now a bipartisan issue that both the MAGAtards and the Dems can agree with which in modern politics is pretty inconceivable, and you're saying we need to emulate more of that type of bullshit?

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u/Millibona 4h ago

and you're saying we need to emulate more of that type of bullshit?

No, I am saying that unless we emulate that type of bullshit, the European economy and stock market will never grow at the same rate as the US.

Which is perfectly fine, but to repeat myself, we have to be honest with ourselves why that is and why Europeans prefer to invest in US companies instead of EU companies. No "capital market union" will solve this.

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u/steam-photons 8h ago

I thought it was because people take 2 months of vacation in summer 🤣

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u/ABoutDeSouffle 𝔊𝔲𝔱𝔢𝔫 𝔗𝔞𝔤! 6h ago

If the EU was honest with itself, it would also address overbearing bureaucracy and stop things like the supply chain act, or the relatively sweeping regulations concerning AI.

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u/svemarsh 4h ago

Well, a good first step for that would be getting rid of the AI act. Or to paraphrase Bill Clinton: It's the bureaucracy, stupid.

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u/yetiflask 3h ago

Yeah, now Europe can really go ALL IN one plastic bottle caps! That'll stand up against American/Chinese tech and AI.

Fucking bottle caps. Jesus

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u/Administrative_Ad213 1m ago

I think most people just want to be able to live their lives and if that means partnering with an economic powerhouse who defends us militarily, so be it. I don’t know why everyone wants to go against Russia on their own or compete with China and India on our own. I also think this whole ‘one Europe’ thing is a bit nonsensical. Like why is investing in Spain who doesn’t want to pay for NATO so wonderful? Should a Swede be happy their money is going to Greece? Why? Because they both happen to be somewhat on the same continent?

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u/Snakend 7h ago

You also don't innovate. You're okay making the exact same thing for 300 years.

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u/UnblurredLines 7h ago

You saying that and being from a country where checks are still a prevalent method of payment says a lot. The majority of "US" innovation is foreign innovation.

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u/Snakend 6h ago

LOL what? I haven't seen a person write a check in a decade.

Get out of here dude. We changed transportation multiple times. We brought you the Internet. We are creating AI. Everything about your life comes from us molding it into what it is today. Even the stuff we didn't invent, we made better. Even if you get an idea, you sit on it forever, and never change it.

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u/UnblurredLines 5h ago

Changed transportation how? Cars and engines were not the US. Railway was not the US, Wright brothers were first to fly but the ground work and following great leaps of innovation were not done by americans. Rocketry was the germans. Radio was a bunch of non americans. The only thing america truly excels at is raising capital and smelling your own farts.

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u/Snakend 5h ago

We made the car available to everyone. Ford's Model T and the assembly line changed how goods are produced forever.

This is what I am talking about. Germany made the car. But who could drive it? Ford sold 15 million model Ts between 1908 and 1927. Daimler-Motoren-Gesellschaft Mercedes Benz) was selling about 1000 cars a year in 1920.

Tesla is the reason EVs are even a thing today. No one would care about EVs if it was still the Nissan Leaf and the Toyota Prius leading the EVs.

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u/Jaeger_Meister_ 7h ago

That's patently false but your comment is not worth debunking

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u/Snakend 7h ago

Every major change to the world in the last 100+ years came from the USA.

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u/Phuka 6h ago

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

No, your tech is only a half-step behind the US (40ish fabs compared to 75, but part of that is because of where your population and infrastructure are concentrated) and your investment structure is how it is because you're responsible not reckless. Trust me as someone from the USA, you do not want our investment climate.

Our affordability and utility cost crises are that way because of our investment climate.

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u/PalpitationUnhappy75 5h ago

Nah man, "AI" is absolute garbo as an investement. Its really good that we are not pressing the pedal on that one. I work in the field, and trust me, whenever someone calls it AI, its proof their full of shit.

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u/upazzu 10h ago

Isnt there a good chance the US economy will explode when the AI bubble pops?

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u/Charlesinrichmond 7h ago

No, almost no chance if you actually look at what will happen when the AI bubble pops.

If it helps, think about what happened when the internet bubble pops and how we hardly use the internet anymore as a result. That's a joke, of course, to be clear, to show how silly that line of thinking is.

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u/upazzu 5h ago edited 5h ago

Not saying AI will never be used ever again after it pops, just saying its gonna have some consequences for US at least

https://isaiprofitable.com/

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u/Harbinger2001 10h ago

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

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u/kenyard 9h ago

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

Makes sense tbh

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u/mangalore-x_x 10h ago

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.

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u/Mdiasrodrigu Portugal 8h ago

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

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u/upvotesthenrages Denmark 3h ago

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.

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u/Mdiasrodrigu Portugal 1h ago

I totally understand you! The thing for me is that we aren’t fueling the European market with our own money and that ends up being a cycle that doesn’t benefit European businesses

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u/upvotesthenrages Denmark 1h ago

But the issue, as highlighted in the article and by many people here, isn't just financing. It's regulation that prohibits financing across the continent.

It's basically death by a thousand cuts when it comes to attracting money, and not pissing away a boatload of it on managing 30 different regulatory frameworks for lots of smaller markets.

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u/Mdiasrodrigu Portugal 37m ago

Indeed ! It’s a very fragmented system

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u/Wonderful_Code5929 10h ago

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

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u/odis69 8h ago

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

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u/hardolaf United States of America 9h ago

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.

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u/upvotesthenrages Denmark 3h ago

Can't really find much on what you're describing. Belgium and Norway seem to do it as the only egregious countries, and Norway isn't part of the EU.

Switzerland seems to have the ability but it's in extremely niche cases.

From what I gather Germany, Netherlands, and Denmark all changed the rules so it's taxable when the stock is sold.

These are relatively recent changes (2018 - 2026) so perhaps you're going on old info?

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u/Prince_of_DeaTh Lithuania 8h ago

That €300B isn’t retail bros DCA’ing into the S&P 500 on an app. It’s massive pension and insurance funds that literally can’t deploy capital locally because of 27 fractured national markets. If you fix the plumbing and give them deep European markets, that money actually has a place to go.

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u/kaisadilla_ European Federation 9h ago

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.

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u/castlite Canada 9h ago

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

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u/Chataboutgames 8h ago

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.

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u/upvotesthenrages Denmark 3h ago

It's not really about investing in EU ETFs.

It's about making it easier for companies to raise money, and investors to invest, across the continent. Currently it's a fucking nightmare due to 27 different regulation sets.

7

u/Prince_of_DeaTh Lithuania 9h ago

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.

1

u/Exciting-Ad6897 1h ago

Indeed, but at the same time, don’t you think that we are running late compared to today’s giants, US and China.
Some people say that the three blocs work differently, the US invents, China copies, EU legislates, perhaps the lack of ambition lead us Europeans to the current situation

•

u/Alphasite 6m ago

I don’t think most tech companies need a $100 million to reach critical mass. Half the appeal of tech is that it’s not very capital intensive. The leverage for tech companies is immense.

Yet it still settled in the US.

What’s app was a billion dollar company iirc with 12 employees or something nuts. It doesn’t take that much money to do that. Stack exchange and like a hundred employees and a hundred or two servers. None of this needs that much money.

2

u/Top_Plan_35 9h ago

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.

4

u/groovyipo 8h ago

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!

2

u/SignificanceWild2922 9h ago

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 )

2

u/Sakarabu_ 10h ago

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.

2

u/Charlesinrichmond 7h ago

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

1

u/ginger_guy 10h ago

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.

1

u/johnmcdnl Ireland 9h ago

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.

1

u/Charlesinrichmond 7h ago

Capital markets are just a minor piece of things. Not to say that's not worth fixing, but access to investment is not why European countries move to the US or sell out to US companies.

1

u/Epyon_ 9h ago

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

1

u/zth25 9h ago

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.

1

u/MysteriousOption5462 8h ago

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.

1

u/Hinx_art 7h ago

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.

1

u/Charlesinrichmond 7h ago

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.

1

u/Unique_Tap_8730 Norway 6h ago

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.

1

u/Some_Vermicelli80 6h ago

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.

1

u/nollayksi 6h ago

This isnt about private individuals investments. Everyone can already freely invest to any EU country or US stockmarkets with a click of a button. This is more geared towards institutional investors etc that want to invest in companies outside the stockmarket.

1

u/rumplestiltskeen 5h ago

More money being thrown at US stock-> higher stock prices -> more attractive investment options instead of the fragmented EU stock markets which overall have smaller liquidity due to their smaller cash flow caused by fragmentation.

Reduce fragmentation -> facilitate investments being made in EU -> more attractive market for both EU investors as well as non EU

1

u/duro-dora-ledaralt 5h ago

I agree but it's also important for startups and European companies too, loads of small stock exchanges mean little capital can be acquired from theese at once, while the US has a HUGE one NYC, which offers a huge source of money for fundraising. This way these companies rather go abroad, be partially acquired by non-europeans and reduce european tax income/local GDP growth

Just fun a fact

1

u/mimimines Belgium 5h ago

If all that money would go to the EU and it’s companies, we also could thrive in tech and AI. Honestly, drain the US, we’re so done with them

1

u/PalpitationUnhappy75 5h ago

The US us growing at the moment in a crazy way. Some would argue, in a "unhelathy cancerous shits gonna explode soon" kinda way. The EU can't change that. And it can not (without really pissing off the waspnest) stop people from investing in that guaranteed not a soon shitshow. But it can make it easier to invest within europe.

1

u/blackanese4649 5h ago

I think you hit the nail on the head. At the end of the day there’s just more VC investment and a robust startup ecosystem that’s better suited/ incentivized in the US. Good or bad there’s more willingness to take high bets in Silicone Valley that doesn’t exist elsewhere which in return allow for these behemoth tech companies. You also can’t negate the fact that the brain dump of entrepreneurs going to the US to start a firm & succeed due to tax incentives/ higher pay.

1

u/Hamster_S_Thompson 4h ago

This will not solve the problem on its own but it will help

1

u/pleh-theGreat 4h ago

I assume it does not concern stocks but bonds. Due to the fragmentation of the eu capital market landscape banks cannot commit to raise large bond amounts for companies. So these eu companies look for us banks to help them raise the capital. The reason why it is fragmented: different tax legislations, each country has a different csd that can issue paper.

1

u/getbent9977 4h ago

Even more so, the number of European companies that end up going stateside for the support and friendly atmosphere to grow.

1

u/philomathie 4h ago

This isn't about the stock market, it's about making it easier for Europeans, banks, and European investment institutions to invest across Europe into European companies.

1

u/minas1 4h ago

They will probably give tax benefits when investing to EU stocks or bonds.

1

u/MetaGryphon 3h ago

Think investing in the US as if we were vikings . We are here to take risks and extracting money from the US and bring it back to EU, where we are taxed by the EU states, mafia style (31% in my country) ..

1

u/niBsn 3h ago

If I want to invest for example into individual stocks like schneider electric, or SAP, Rheinmetall, Siemens I am f*** and I would have to pay double tax.

1

u/Vargdidan 3h ago

I would say Linux is the backbone of every notably important server in the world. And that tech comes from Finland. Now almost all software is version controlled in Git, another really important piece of what makes the world of software tick. Europe certainly have the tech, but we have not leveraged it and we probably also lack in grifting people for money like most big tech companies does.

1

u/imp0ppable 3h ago

There are some really good Eurozone and UK ETFs as well btw, you can put a chunk of savings in those to diversify a bit without losing returns.

1

u/hikisfit 3h ago

Unclear if the OP doesn’t understand what this witch is saying, or if he’s actually not the brightest tool in the shed.

The witch is simply opening the discussion on the state sponsored confiscation of regular people’s saving accounts, aka communism of the highest order. Good luck Europe!

1

u/varateshh 3h ago

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

Creating a common stock market is step 1. European Union will likely introduce a tax scheme that favours the EU/EEA. Either they tax investments outside the zone higher or create schemes that allow you to defer capital gain tax when moving in and out of stocks/bonds based in the EU (ie: savings account for stocks/bonds that is not taxed until you withdraw money). Once you lose a few percentage points every year to taxes the European stocks look a lot more appealing.

1

u/Ronoh 2h ago

Ai growth is a bubble and sp500 i flat without it. When it bursts we will all be affected by all the irrationality in the market right now.

1

u/01_vampyr 2h ago

Your logic is retarded. How has the S&P done compared to European stock markets this year?

1

u/EconomicsSavings973 Poland 2h ago

Maybe they should start taxing USA giants instead of native companies just for existing (at least in Poland idk about the rest of eu).

1

u/Exciting-Ad6897 1h ago

Thanks you’ve resumed pretty well why money flies abroad.

1

u/LlorchDurden 1h ago

It's more about moving off US than any other long term plan. All countries on board, rare they all agree

•

u/Smug_Designer 58m ago

ASML is quit important

•

u/SFauconnier 53m ago

It's chicken and eggs problem :-)

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u/SeriousOrdinary 30m ago

You're contradicting yourself. People invest in the S&P500 = people invest in US companies. Obviously, the stocks will go up more then and therefore there is tremendeous US growth. If Europeans would invest it more in European companies, then European growth will increase, making it even more attractive to invest in Europe for people all around the world.

•

u/Redfoolio 28m ago

Yeah, the European companies just need to raise their market caps and they'll gain a larger share of the All World ETFs.

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u/siazdghw 27m ago

Exactly this.

The reason international investors and banks buy US stocks and assets isn't because they love the US, it's because for decades the US has been one of the best markets to invest in.

Investors just want to make money. So they buy US companies.

If Europe had a better track record of performance then people would be investing more into Europe, even Americans, but HISTORICALLY Europe has lagged behind the US, even if in recent years the EU has performed well.

If policy makers want people to invest in Europe, the way to do this isn't by force, it's by improving the EU economy and making it desirable to invest in.

1

u/heyitsyourboyadam 9h ago

we can grow bananas - since that's what we are now - banana republic - and they are coming for our savings accounts.

  • All this talk is just BS - they just want to dip their greasy hands into our savings accounts.

1

u/beamer145 10h ago

I fully agree with you( if I compare my eu gains to us gains it is very sad). So either they are stupid (quite possible), or these changes are not targeted at the active investors, but at the savings money parked in banks (make it easier for companies to loan money from european banks etc) ?

1

u/tooN811 10h ago

100% agree with you, it starts in university already when the best students get already invited by Mag7 and eventually move to the US. Europe is not attractive because we don’t have the same Startup culture and Venture Capitalist Cultute like the US. We don’t innovate, we just copy. Tech is all U.S.

1

u/Infamous_Alpaca 10h ago

It is not about tomorrow but on the long term perspective. If raising capital because easier in the EU then we could see more startups staying here.

1

u/-Ultra_Violence- Friesland (Netherlands) 9h ago

Relying on tech companies for your growth is like building on quicksand mate

rather put that money in real tangeble european companies

1

u/Charlesinrichmond 7h ago

Like coal and steam engines, those would be great.

-4

u/Tight_Disaster_7561 10h ago

Also taxes our continent just loves taxes. One of the reasons I invest in USA is because I get preferential taxes through Ireland together with w-8ben.

Also fuck taxes.

4

u/Sakarabu_ 10h ago

One of the reasons I invest in USA is because I get preferential taxes through Ireland together with w-8ben.

One of the reasons you invest "in USA", is because you can do it from Ireland (which is in the EU, and has lower taxes than the US), and use a form which let's you take your investment gains out using the preferential tax of the EU?

So... Ireland has lower taxes than the US?

3

u/stilljustacatinacage 10h ago

Yes. Ireland is a very popular tax haven. They're bragging about not paying their share.

4

u/Tight_Disaster_7561 10h ago

Again preferential taxes compared to my god forsaken country. But yes that is the reason.

The point of investing is to generate capital, if I pay half of it in taxes it makes the point null...

2

u/namtab00 10h ago

Also fuck taxes.

That's a very American take, you'd be right at home there..

3

u/Tight_Disaster_7561 10h ago

Come to Romania, my paycheck goes to corrupt officials and their families. Wanting to pay taxes is beyond regard by my standards.

0

u/Gasparde 9h ago

The EU's position can never change as long as they keep themselves this dependent on the US market. You cannot reproduce US growth in the EU if all you do is investing into even more US growth.

The US will grow way slower if half of the EU suddenly decides to invest their money into the EU instead of the US. That's not something that's gonna happen from one day to another, that's obviously a process that's gonna take time.

The EU has to take the risk of investing into itself. The EU will never step out of the US shadow as long as they keep investing into US infrastructure instead of their own. You have to change something about the status quo if you ever hope of changing the status quo.

0

u/Other-Credit1849 9h ago

You mean they aren't spending billions on what will become useless "AI centres" vacant lots?

0

u/8-Cylinder_Wombat 8h ago

benefit from US growth

Those days will soon be over. Best get ahead of the curve.

0

u/elictronic 8h ago

Europe can require companies to invest some % of retirement accounts into a European market. There are hundreds of other ways to do it, but having a clear and concise investment vehicle is a first natural step.

-1

u/87utrecht 9h ago

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.

What the S&P500 has done is concentrated into very few companies and skyrocketed their PE ratio to near all time highs. It's not growth because of fundamentals. It's growth because everyone is piling into a bubble.

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

Yes really. Picking out one sector and then saying that's the only thing that will do anything is stupid.

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.

Maybe the point is investing in new companies ? Those would not be in any ETF.

-1

u/gdstruga 7h ago

But how much more growth is *really* needed before we burn our planet, and dry out all the water?
In Europe we already have all the technology needed to have food, medicine, construction and transport for every EU citizen to live like a king. So maybe we should focus on getting our monetary and political system in order, instead of endless "growth" (which by the way is the literal characteristic of cancer).

0

u/konstfack 4h ago

That was AI.