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/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/Hutcho12 5h ago

I'm sorry, that's a really stupid take on this. Just because there is another step in there to buy something, doesn't mean it doesn't belong to you.

Once your company releases those stocks, it is worth something, so you need to pay tax on it.

If your company gifts you a car, you think you shouldn't have to pay tax on it until you sell it?

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u/MilkHaterNumber1 5h ago

If your company gifts you a car, you think you shouldn't have to pay tax on it until you sell it?

If you want people to be able to be paid in cars then yes you shouldn't tax it until you sell. Otherwise, people would have to sell the car to have the cash for the tax. But also this isn't a real comparison obviously because a car is a tangible good.

Have you even considered what happens if the stock you've paid tax on suddenly goes to $0? Now you're out that "income" and you've paid tax on literally nothing.

Congratulations on your dumb ass plan.

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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/Hutcho12 5h ago

Options is a different matter. I’m talking about receiving stocks as part of your compensation. This is income, and should be taxed as such as soon as the stocks become yours.

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u/CopperSulfateII Europe 5h ago

I mean this is done by options for employees. Even in countries with terribly disadvantageous tax systems for it. 

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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/