The European Banking Federation (FBE) and the European Fund and Asset Management Association (EFAMA) have recommended that paying agents (and administrators acting for funds investing in other funds) apply a home country rule as the best way forward in terms of the classification of funds and fund events and the calculation of income arising from fund events under the EU Savings Directive.
The scope of application of the EU Savings Directive (EUSD) includes interest that extends to income or interest arising on distribution and sale/redemption events relating to certain funds. Therefore, in order to properly apply the EUSD, EU paying agents (and administrators acting for funds investing in other funds) need first to be able to classify funds and fund events according to whether they fall under the scope of the EUSD and, if so, to determine the income or interest arising on fund distribution or fund sale/redemption. In relation to funds established in the EU, in a dependent or associated territory, or in a neighbouring financial center with which the EU has an agreement, FBE and EFAMA advocate the application of a “home country principle.”
According to the two organizations, paying agents (and administrators acting for funds investing in other funds) will rely on information produced by the fund or any agent appointed by the fund, according to the rules that result, in the country in which the fund is established, from the implementing legislation and guidance issued by the competent authority.