Romania ranks near the bottom in Europe when it comes to the tax system for venture capital and private equity, according to the findings of a KPMG study on European tax and legal environments.

In the last quarter of 2008, the European Private Equity and Venture Capital Association (EVCA) launched its fourth benchmarking study of European tax and legal environments, carried out in conjunction with KPMG’s Mergers & Acquisitions Tax Service.

The survey covers 27 countries and focuses on how favorable the tax system is in each for venture capital and private equity. It aims to compare tax regimes, as well as to promote the most efficient fiscal and legal framework for these types of investment within an integrated European market.

The countries are graded on a scale of 1 to 3, with 1 the highest possible score and 3 the lowest. This year, France was the best ranking country achieving a score of 1.23, followed by Ireland (1.32) and Belgium (1.33). The study revealed that there are bigger differences between Europe’s most and least favorable tax and legal environments than in previous years. Another key finding was that while most EU member states provide a suitable domestic fund structure for private eqity and venture capital, cross-border fundraising and investment faces more barriers.

Romania took 24th place out of 27 countries surveyed, with a score of 2.27. As Valentin Tic, Tax Partner at KPMG in Romania, points out “the results of this study are interesting because they show that many countries which are traditionally considered to have high taxes provide quite a favorable environment for venture capital and private equity. In contrast some new EU member states like Romania with low headline rates of corporate and personal tax do less well.”

Daniela Nemoianu Istocescu (photo), Partner in KPMG in Romania’s Advisory Department has assis