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Streamlining cross-border distribution of UCITS and AIFs in the EU

The EU Commission proposes to simplify the rules on cross-border distribution of UCITS and AIFs in the EU by transporting rules from EU directives requiring Member State implementation into the directly applicable Cross-Border Distribution Regulation and thereby reducing national options and discretions to prevent gold-plating.

On 4 December 2025, the EU Commission published legislative measures that propose to amend Regulation (EU) 2019/1159 (Cross-Border Distribution Regulation) with the aim of removing barriers to the cross-border marketing of AIFs and UCITS and harmonising rules on marketing communications, while at the same time strengthening ESMA’s powers to foster a common supervisory culture and better coordinate activities across home and host national competent authorities.

To this end, the EU Commission proposes several amendments to the Cross-Border Distribution Regulation, Directive 2009/65/EC (UCITS Directive) and Directive 2011/61/EU (AIFMD).

Harmonise marketing communications

The proposal clarifies that fund managers must ensure that marketing requirements are met even when they delegate the marketing function to a third party. However, when third-party distributors market funds on their own behalf (the recitals refer to distributors acting on their own behalf under Directive 2014/65/EU (MiFID II) or through life insurance-based investment products in accordance with Directive (EU) 2016/97 (IDD)), those distributors will be responsible for ensuring that the marketing communications comply with the Cross-Border Distribution Regulation. In addition, the proposal specifies that host Member States cannot impose additional requirements on marketing communications beyond those established in Article 4 of the Cross-Border Distribution Regulation. The EU Commission is empowered to adopt delegated acts specifying the format and content of marketing communications.

Several provisions are being deleted to reduce diverging national practices on marketing communications and regulatory fees.

A new provision specifies that competent authorities of host Member States cannot require prior notification of marketing communications. However, if they believe marketing communications do not comply with requirements, they may ask the competent authorities of the home Member State to take appropriate measures to prevent or penalise further irregularities. The host Member States may also refer the matter to ESMA if they are not satisfied with the actions taken by the home Member State.

Increase transparency on fees and charges levied by host Member States

ESMA is mandated to establish (within 24 months following the entry into force of the currently proposed amendments) and keep up-to-date a data platform on regulatory fees and charges imposed by the competent authorities of host Member States to fund managers marketing UCITS or AIFs in their territories, including the level and frequency of those fees and how they should be paid.

Improve the passporting regime for UCITS and AIFs

ESMA is also empowered to develop another data platform that includes information on UCITS and AIFs marketed cross-border, the documentation provided as part of their marketing notification and any changes thereof, and de-notifications of marketing arrangements. ESMA must establish such a platform within 24 months following the entry into force of the currently proposed amendments.

The rules governing the marketing of UCITS and AIFs managed by an EU AIFM across the EU are transferred from the UCITS Directive and the AIFMD, respectively, into the Cross-Border Distribution Regulation and amended to optimise marketing notification and de-notification procedures and facilitate cross-border marketing of UCITS and AIFs. Fund managers can market UCITS and AIFs in Member States other than their home Member State by indicating this intention in their application for authorisation and transmitting the relevant documentation as part of their authorisation documentation linked to the marketing of UCITS and AIFs in other Member States. Once authorised, the competent authority of the home Member State must transmit that information to the above-mentioned ESMA data platform and the UCITS or AIFM will then be able to access the markets of the indicated Member States from the date of that transmission. Specific procedures are introduced for changes to the initial marketing notification, including changes to the Member States where the UCITS or AIFs are to be marketed.

The de-notification of marketing arrangements currently set out in the UCITS Directive and in the AIFMD are transferred into the Cross-Border Distribution Regulation and simplified. The existing 36-month prohibition on pre-marketing EU AIFs with similar investment strategies in the Member State identified in the de-notification is removed.

Supervise investment funds marketed across the EU

The Cross-Border Distribution Regulation is amended to specify the powers of the host Member States over the UCITS and AIFs marketed in their territories. In addition, ESMA is empowered to identify and pursue actions to address diverging, duplicative, redundant and deficient supervisory actions hindering cross-border marketing of EU AIFs managed by an EU AIFM or UCITS. Moreover, the proposed amendments grant ESMA the power to intervene when national authorities do not effectively apply EU rules, or to directly suspend cross-border marketing in certain cases. Finally, competent authorities can refer to ESMA any disagreements on assessments, actions or omissions, which ESMA should settle in accordance with its powers.

Next steps

These are preliminary proposals that must undergo the full EU legislative process with the legislative proposals now under review by the EU Parliament and the Council of the EU. A number of amendments can likely be expected.

Related documents

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How we can help

We will continue to follow the legislative developments and gather market intelligence on the practical implications of the proposed changes. We will also discuss specific impacts on certain situations with our clients. Given the significant implications of these proposals for Luxembourg-based entities and the substantial uncertainty surrounding the legislative process, we recommend that affected stakeholders engage proactively in the consultation process. In the meantime, we remain available to discuss the proposed measures and their possible impact on your operations. Please reach out to your usual contact.