FTT

UK House of Lords EU Committee Report on European Commission’s Financial Transaction Tax Proposals

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On December 10, the UK House of Lords EU Sub-Committee on Economic and Financial Affairs published a follow-up report to its March 2012 report on the European Commission’s proposals for a financial transaction tax (FTT).

The Committee’s report identifies “serious” flaws with the Commission’s use of enhanced cooperation, including the adverse impact on institutions in non-participating member states, such as the UK.  Report.

EU Institutions in Public Disagreement over the Legality of the Financial Transaction Tax

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Lawyers for the European Commission and EU member states are in public disagreement over the legality of the FTT.  A leaked legal opinion produced by the EU Council’s legal service alleged that the FTT was both incompatible with EU law and likely to distort competition.  The Commission “strongly disagrees with the Council lawyers’ opinion.”  The report also notes that a “very thorough” legal analysis had been conducted on the FTT proposal.

Discussions on the FTT will continue with an expected implementation date of December 1, 2014.  Legal Opinion (available on the FT website).

European Parliament Adopts Legislative Resolution on Financial Transaction Tax

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On 23 May 2012, the European Parliament approved an amended version of the European Commission’s proposal of 23 September 2011 for a Council Directive on a common system of financial transaction tax (FTT). The Resolution states that such a FTT should go ahead even if only some member states would opt for it.

The Resolution:

  • Retains the Commission proposal timetable: 31 December 2013 deadline for member states to adopt implementing laws and 31 December 2014 for entry into force of these laws.
  • Retains the original Commission proposal to exempt transactions made on the primary market, purchasing of securities from the issuer when such securities are first placed on the market.
  • Inserts an “issuance principle” to the Commission’s proposal, whereby financial institutions located outside the EU would also be obliged to pay the FTT if they traded securities originally issued within the EU.
  • Exempts pension funds from the FTT.

The resolution can be found here.

European Financial Transaction Tax Developments

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On 3 January 2012, Denmark, who assumed the rotating EU presidency on 1 January 2012, initiated a technical review of the European Commission’s proposal for a European financial transaction tax (FTT). Meanwhile, on 23 January France and Germany are expected to present a joint FTT proposal with a view of moving towards implementation across Europe in 2013. The proposed FTT is also on the agenda for the January 30 EU Summit. European Commission Proposal COM(2011) 594 final.

European Financial Transaction Tax Developments

Posted on

On January 3 2012, Denmark, who assumed the rotating EU presidency on January 1 2012, initiated a technical review of the European Commission’s proposal for a European financial transaction tax (FTT). Meanwhile, on 23 January France and Germany are expected to present a joint FTT proposal with a view of moving towards implementation across Europe in 2013. The proposed FTT is also on the agenda for the January 30 EU Summit. European Commission Proposal COM (2011) 594 final.