NEW YORK, Sept. 16, 2021 /PRNewswire/ -- NYPPEX, one of the world's leading providers of secondary private equity liquidity, today announced its Guide to Financial Transaction Taxes for Secondary Interest Transfers in Alternative Investment Funds Worldwide.
NYPPEX believes this is an opportune time to introduce its Guide as governments increasingly seek to impose higher financial transaction taxes on sellers, buyers and/or funds to pay for social programs or budget shortfalls due to declines in tax revenue caused by COVID-19 and citizens emigrating to other jurisdictions.
The NYPPEX Guide focuses on countries which have active investors and/or sponsors of alternative investment funds, which include all strategies such as buyout, venture, real estate, fund of funds, natural resources, infrastructure, distressed debt and hedge.
Some jurisdictions with actual or proposed financial transaction taxes are:
United Kingdom…………..Stamp Duty Tax of 0.5% to 1.5% on each applicable financial transaction.
France……………………..Financial Transaction Tax of 0.3% on each applicable financial transaction.
Hong Kong………………..Stamp Duty Tax of 0.1% to sellers on each applicable financial transaction.
European Union…………Financial Transaction Tax on each participating country member of 0.01% to 0.10% on applicable financial transactions (proposed).
United States……………..Financial Transaction Tax of 0.1% to 0.5% on each applicable financial transaction (proposed).
NYPPEX believes financial transaction taxes cause wider bid and ask price spreads, reduced investment returns that would adversely impact retirement and other accounts, and reduced secondary market liquidity for securities including interests in alternative investment funds.
Currently, there are 4 primary types of financial transaction taxes that may affect transactions in stocks, bonds or other financial contracts such as options, derivatives and secondary interest transfers in alternative investment funds.
The 4 types of financial transaction taxes.
Financial Transaction Tax ("FTT") …A tax on the sale or purchase of stocks, bonds, options, financial contracts or secondary interests in alternative investment funds.
Securities Transaction Tax ("STT") …A tax on the total purchase price paid on transfers of stocks, bonds, options, financial contracts or secondary interests in alternative investment funds, imposed at the time of transfer.
Stamp Duty Tax… A tax on documents needed to legally record certain events such as marriage, transfers of property and secondary interests in alternative investment funds.
Transfer Tax… A tax typically charged by a local jurisdiction on the transfer of ownership of an asset such as property and secondary interests in alternative investment funds.
In general, the party accountable for reporting and paying the financial transaction tax is the alternative investment fund, which is passed on to the seller and/or buyer.
The NYPPEX Guide seeks to provide qualified investors and fund sponsors worldwide with a better understanding of financial transaction tax laws in various jurisdictions to make good decisions when divesting, purchasing or permitting secondary interest transfers in alternative investment funds.
Qualified investors and fund sponsors interested in receiving the NYPPEX Guide, or learning more, can email direct to NYPPEX at [email protected].
Risk Disclosure:NYPPEX provides its Guide for informational purposes only. The Guide is incomplete, relies on information from 3rd parties and such information may be incorrect or change at any time without notice or update to the Guide. For current and complete financial transaction tax information, please consult with tax professionals on the tax laws in each country and jurisdiction.
Private placements are illiquid, speculative and investors may lose their entire investment.
About NYPPEX Holdings
NYPPEX Holdings operates a global private marketplace that provides price data and the opportunity for qualified investors to access secondary liquidity in alternative investment funds in a fair and ethical manner. Its clients include alternative investment funds, financial institutions, endowments, foundations, institutional investors, family offices, private clients and their respective advisors worldwide.
Since 2004, the NYPPEX QMS™ has been formerly recognized by the U.S. Internal Revenue Service as a Qualified Matching Service for private partnerships though a private letter ruling under Internal Revenue Code §1.7704.
Its private securities are privately offered to qualified investors through NYPPEX, LLC and only in jurisdictions were permitted. NYPPEX is regulated in the U.S. by the SEC and FINRA. Member FINRA, SPIC.
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