As a new model for raising capital, money raised through crowdfunding is making an impact across all of Europe. In German-speaking countries alone, more than a quarter-million Euros have been raised through crowdsourcing platforms to finance numerous start-ups, projects and good cause initiatives. This has attracted the attention of the European policy makers. At a conference in Poland this coming November, a European declaration on crowdfunding will be released. Naturally, the question of regulation has been raised; given that both the model and rules of participation have yet to be defined and adopted in a consistent way, there remains much ambiguity.
Crowdfunding is used as a model for funding start-ups on platforms such as growvc.com, c-crowd.ch or seedmatch.com. For these type of platforms, it's much more likely that rules regarding investor protection, transparency issues and financial reporting could apply. Within the creative industry, where often funds are being raised for initiatives or to develop merchandise rather than to form legal entities, crowdfunding is much less likely to be regulated and the applicability of different rules across the European Union varies greatly from country to country. For instance, a lot of project initiators are not aware that the rewards given to the funders (for instance, when pre-selling CDs to crowdfund the production of a music album) are subject to sales tax and therefore should be incorporated in the financial planning of the crowdfunding project.
To read the full, original article click on this link: Crowdfunding Regulation in Europe
