Summary report of the European Commission work on removing obstacles
Given the effects of the financial crisis and the associated economic uncertainty, a well-functioning venture capital market can help to mitigate the effects of the crisis and tackle the barriers to innovation. Venture capital funds are a valuable source of finance for innovative firms with a high growth potential. The purpose of this report is to provide a summary of the policy work in the period from 2005 to 2009 on removing obstacles to cross-border venture capital.

The work on removing obstacles to cross-border venture capital is an ongoing process. In summarising the Commission policy work and measures taken by some Member States by mid 2009, this report also refers to the ongoing legislative process on the Commission proposal for a Directive on alternative investment fund managers as well as reviews the conclusions of a recent expert group on overcoming the identified direct tax obstacles when investing across borders.

Results

The main policy document produced during the indicated period is the Commission Communication “Removing obstacles to cross-border investments by venture capital funds” (December 2007). Based on this Communication, the Competitiveness Council, the European Parliament and the Economic and Social Committee issued conclusions agreeing with the goal and inviting a political commitment towards a more integrated venture capital market in Europe. The Communication was based on the outcome of the various consultations and identified mutual recognition of venture capital funds as the way forward in the short term. However, this process has not yet contributed to a reduction of the fragmentation of venture capital markets in the EU and has not brought the expected short term results.