Response to the Commission consultation on DEBRA

FESE wishes to stress that initiatives aimed at eliminating the debt-equity bias should not impose new barriers to debt instruments; rather, new policies should result in investors paying lower taxes on their equity investments, incentivising the provision of equity capital as an alternative source of funding. To orient more investor/investment flows towards listed equity instruments, regulatory disincentives that suppress investor demand, or the creation of new taxes specific to the trading/investment in public equities, should be avoided.

Companies should be encouraged to consider strengthening their equity base as an alternative to debt financing. An EU-wide approach to tackle the debt-equity bias would reduce tax competition and fragmentation, establishing a common approach. However, we encourage EU policymakers to consider the different characteristics of public equity and debt markets when undertaking capital markets regulatory initiatives.