The European Commission has opened an investigation into a planned Danish scheme facilitating access to risk capital for small and medium sized enterprises (SMEs). The scheme would provide favourable tax treatment for certain institutional investors, especially pension funds and insurance companies, investing in shares traded on alternative markets. By encouraging these investors to invest in alternative markets, Denmark hopes to provide an extra source of equity financing for SMEs. However, the Commission believes that the measure could give rise to distortions of trade and competition within the EU's Single Market and doubts whether the scheme addresses a true market failure. Further, the measure could discourage other investors and may not be the most appropriate instrument to attain the planned objective. Interested parties are invited to comment on the proposed measures.