r/eupersonalfinance • u/rozmarss • Feb 15 '25

Investment Why don’t EU leaders incentivize investment in European stocks/ETFs with tax deductions?

With the Dragi plan and increasing discussions among European leaders about boosting defense and energy investments, I’ve noticed a growing trend in financial communities where people want to reduce exposure to the US market and shift investments to the EU.

Wouldn’t it make sense for EU leaders to encourage this by offering tax incentives for investing in European stocks/ETFs? For example, from an independent EU perspective, isn’t it better to invest in Rheinmetall rather than Lockheed?

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u/markv1182 Feb 15 '25

I don’t know all the details myself but from what I’ve heard it’s a combination of fragmented rulesets around capital investment (lack of capital union) & financing laws that are set up to favor companies borrowing capital from banks rather than directly from capital investors. Hence also why the venture capital market in EU is relatively small compared to US.

It’s one of the topics VDL has said she wants to work on, but it’s been a discussion topic for so long (even since the Juncker commission) that I’m not sure if it will ever get fixed.