ABBL
Association des Banques et Banquiers, Luxembourg
The Luxembourg Bankers' Association
Luxemburger Bankenvereinigung
On 7 October 2010, the European Commission published a communication setting out ideas for the future taxation of the financial sector.
This initiative was followed on 22 February 2011 by the launch of a public consultation on the taxation of the financial sector, aimed to receive as broad a feedback as possible on the ideas set out in the Communication.
On 28 September 2011, the European Commission made a proposal for a financial transaction tax.
The tax would be levied on all transactions on financial instruments between financial institutions when at least one party to the transaction is located in the EU. The exchange of shares and bonds would be taxed at a rate of 0.1% and derivative contracts at a rate of 0.01%. This could approximately raise €57 billion every year.
The Commission has proposed that the tax should come into effect from 1st January 2014.
The Commission has decided to propose a new tax on financial transactions for two reasons:
- First, to ensure that the financial sector makes a fair contribution at a time of fiscal consolidation in the Member States. The financial sector played a role in the origins of the economic crisis. Governments and European citizens at large have borne the cost of massive taxpayer-funded bailouts to support the financial sector. Furthermore, the sector is currently under-taxed by comparison to other sectors. The proposal would generate significant additional tax revenue from the financial sector to contribute to public finances.
- Second, a coordinated framework at EU level would help to strengthen the EU single market. Today, 10 Member States have a form of a financial transaction tax in place. The proposal would introduce new minimum tax rates and harmonise different existing taxes on financial transactions in the EU. This will help to reduce competitive distortions in the single market, discourage risky trading activities and complement regulatory measures aimed at avoiding future crises. The financial transaction tax at EU level would strengthen the EU's position to promote common rules for the introduction of such a tax at global level, notably through the G20.
The ABBL believes that introducing a financial transaction tax only at EU level, or even worse only at euro zone level, would be very harmful. Such a unilateral introduction would have considerable negative economic consequences for the European economy and would lead to job losses, as activities and transactions would simply be delocalised outside the EU or the euro zone respectively. Luxembourg finance minister Luc Frieden also stated that introducing such a tax only in the euro zone and not in all important financial centres would be "risky".
The ABBL on the FTT - "La taxe pouvant rapporter moins", Le Quotidien, 10.1.2012
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... "Avec la crise il a fallu trouver un bouc émissaire et on a désigné le secteur financier dans son ensemble. On imagine que celui-ci ne paye pas de taxes, ce qui est faux. Nous sommes opposés à une telle taxe"
Jean-Jacques Rommes explique aussi que les bénéfices qu'ont faits les banques pendant vingt ans ont rapporté beaucoup d'argent aux Etats où la place financière est forte. D'autre part, avec les fonds d'investissement, le Luxembourg récupère chaque année 500 à 600 millions d'euros avec la taxe d'abonnement qu'il présente comme une forme de taxe sur les transactions financières. Instaurer une taxe Tobin uniquement dans l'Eurogroupe reviendrait donc à faire fuir ces institutions du Luxembourg et donc paradoxalement faire perdre de l'argent à l'Etat.
«Il y aurait alors un seul gagnant en Europe, celui qui s'y est opposé, la Grande-Bretagne», explique Jean-Jacques Rommes.
L'ABBL est donc farouchement opposée à cette taxe dont on ne sait pas, d'autre part, avec quel mécanisme elle pourrait s'appliquer. Les questions fiscales ne sont décidées qu'à l'unanimité au sein de l'UE.
Or il n'est déjà plus question de la faire adopter au niveau des 27, puisque la Grande-Bretagne y est opposée.
Il faudrait alors passer par l'Eurogroupe qui a décidé à la fin 2011 d'un pacte de coopération renforcée en matière fiscale et budgétaire. Mais ce pacte n'a actuellement aucune valeur juridique et la seule solution serait donc de compter sur le fait que chaque pays de l'Eurogroupe voudra bien appliquer chez lui, dans son droit national, cette taxe. Il y a déjà fort à parier que le Luxembourg serait contre et sur ce point l'Allemagne pourrait le rejoindre.
Le Quotidien - "La taxe pouvant rapporter moins" - Page 6, Delphine Dard - 10 janvier 2012
The ABBL on the FTT - "ABBL-Direktor wirft Sarkozy politisches Kalkül vor", Lëtzebuerger Journal, 10.1.2012
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Finanztransaktionssteuer
Bei dem gestrigen Treffen zwischen dem französischen Staatspräsidenten Nicolas Sarkozy und der deutschen Bundeskanzlerin Angela Merkel stand ein Thema ganz oben auf der Tagesordnung: die Einführung einer Finanztransaktionssteuer.
Besonders Frankreichs Regierungschef pocht immer stärker auf die Umsetzung dieser Maßnahme.
Nicht wenige werfen Sarkozy vor, mit diesem Thema auf Wahlfang zu gehe; schließlich wählt Frankreich in wenigen Monaten einen neuen Präsidenten.
Zu den Befürwortern dieser Theorie zählt auch ABBL-Direktor Jean-Jacques Rommes. Er äußerte sich gestern gegenüber dem Lëtzebuerger Journal wie folgt:
"Es ist kein großes Geheimnis, dass wir gegen die Einführung einer Finanztransaktionssteuer sind, die nicht auf dem G-20 Gipfel beschlossen worden ist. Wenn man dieses Instrument nur in der Eurozone einführt, wird sich die Abwicklung von Finanztransaktionen immer mehr in Länder außerhalb der Währungsunion verlageren.
Das dient keinem der Euro-Staaten und schon gar nicht dem Finanzplatz Luxemburg. Ich sage es ganz deutlich: Wenn Nicolas Sarkozy jetzt kurz vor den Präsidentschaftswahlen meint, mit dieser Idee vorpreschen zu müssen, dann soll er diese Steuer doch erst einmal in Frankreich einführen.
Die daraus gewonnenen Erfahrungen werden anschließend zeigen, was eine solche Maßnahme schlussendlich wert ist."
Lëtzebuerger Journal - "ABBL-Direktor wirft Sarkozy politisches Kalkül vor" Seite 2, Luc Weber - 10. Januar 2012
The ABBL on the FTT - "ABBL: Transaktionssteuer stößt auf Widerstand", Wort.lu, 10.1.2012
Die ABBL kann sich mit der geplanten Transaktionssteuer nicht anfreunden.
(vb) – Sie wird seit Jahren diskutiert, kam jedoch noch nie zur Anwendung: Jetzt fordern der französische Staatspräsident Sarkozy und die deutsche Kanzlerin Merkel eine Finanztransaktionssteuer.
Die Luxemburger Bankenbranche bezeichnet die Pläne als "kompletten Quatsch". Die Folgen der Steuer wären "selbstmörderisch".
Deutschland und Frankreich wollen die Krisenverursacher an die Kandare nehmen. Und nach ihrer Sichtweise sind das in erster Linie die Banken. Mit einer Transaktionssteuer möchten die Staatschefs zwei Fliegen mit einer Klappe schlagen: Einmal soll der Finanzsektor zur Kasse gebeten werden und damit Steuereinnahmen erzeugt werden.
Zum anderen sollen kurzfristige Spekulationen, zum Beispiel mit Aktien, Währungen oder Derivaten, eingedämmt werden.
Nach dem Vorschlag der EU-Kommission soll die Transaktionssteuer den Wertpapierhandel nur mit einem geringen Steuersatz von 0,1 Prozent pro Handel verteuern.
Dies würde dann hauptsächlich die großen Akteure treffen, die große Aktienpakete zum Teil mehrmals täglich kaufen und verkaufen.
Obwohl sich Merkel und Sarkozy in dieser Frage angenähert haben, steht es noch in den Sternen, ob die Steuer in der EU jemals Realität wird. Die Nicht-Euro-Länder Großbritannien und Schweden lehnen sie uneingeschränkt ab. Auch Staaten im Euro-Raum, wie etwa Luxemburg, sind dagegen.
Höhere Kosten für Banken und Kunden
Beim Luxemburger Bankensektor hält man die Ideen der deutsch-französischen Achse für fragwürdig. Für Jean-Jacques Rommes, Direktor der Bankenvereinigung ABBL, könnten die Auswirkungen für den Euro-Raum fatal sein. "Investoren von außerhalb des Euroraums würden ihre Geschäfte anderswo tätigen, dadurch würden in der Eurozone massiv Arbeitsplätze abgebaut werden", prophezeit Rommes.
Er sieht zudem zusätzliche Kosten auf die Bankkunden und Fonds-Sparer zukommen, da die Banken ihre höheren Steueraufwendungen zum Teil an den Kunden weitergeben werden. Ihren eigentlichen Zweck, nämlich Spekulation einzudämmen, werde die Steuer nicht erfüllen, ist sich Rommes sicher.
Für die Finanzplätze im Euro-Raum, würde sich die Steuer schädlich auswirken, meint der ABBL-Direktor: "Die Aktivitäten hier würden schrumpfen, während die Londoner City wachsen würde." Banken sowie Kunden würden ihren Handel einfach in andere Länder verlegen – und sei es in außereuropäische Finanzplätze wie Singapur, Hongkong oder Dubai.
Wort.lu - "ABBL: Transaktionssteuer stößt auf Widerstand " - Volker Bingenheimer, 11. Januar 2012
Commission: Definition - What is a financial transaction tax?
A financial transaction tax (FTT) is a tax applied to financial transactions, usually at a very low rate. A financial transaction applies to the exchange of financial instruments between banks or other financial institutions. The financial instruments in question include securities, bonds, shares and derivatives.
They do not include the transactions typically undertaken by retail banks in their relations with private households or businesses, except when they relate to the sale or purchase of bonds or shares.
What is a financial institution?
The definition of a financial institution in the Commission's proposal covers a wide range of institutions in order to avoid circumvention of the tax and includes essentially investment firms, organised markets, credit institutions, insurance companies, collective investment undertakings and their managers, alternative investment funds (such as hedge funds), financial leasing companies and special purpose entities.
What is the difference between transactions carried out on organised markets or over the counter?
Within the derivatives markets, many products are traded through exchanges on organised markets. Products traded on the exchange must be standardised for the purpose of transparent trading.
Non-standard products are traded in the so-called over-the-counter (OTC) derivatives markets. OTC derivatives have a less standard structure and are traded bilaterally (between two parties).
What is the residence principle?
The financial transaction tax would be based on the principle of tax residence of the financial institution or trader. Taxation would therefore take place in the Member State in which the establishment of the financial institution involved in the transaction was deemed to be located. This would help to reduce the risk of relocation, because a financial transaction would be taxed in each case where an EU resident was involved even if the transaction was carried out outside the EU.
MEMO/11/640 - European Commission, 28 September 2011
Commission: Background
As a result of the crisis, public debt in all 27 EU Member States jumped from below 60% of GDP in 2007 to 80% for the years to come. The financial sector has received substantial financial support from governments. EU Member States have committed € 4.6 trillion to bail out the financial sector during the crisis. In addition, the financial sector has benefited from low taxes in recent years. The financial sector enjoys a tax advantage of approximately €18 billion per year because of VAT exemption on financial services. A new tax on the financial sector would ensure that financial institutions contribute to the cost of economic recovery and discourage risky and unproductive trading.
The financial transaction tax aims at taxing the 85% of financial transactions that take place between financial institutions. Citizens and businesses would not be taxed. House mortgages, bank loans, insurance contracts and other normal financial activities carried out by individuals or small businesses fall outside the scope of the proposal.
The Commission has explored the idea of taxing the financial sector at EU level for several months now.
On 29 June 2011, the Commission announced in the context of the multiannual financial framework that it would propose to set up a financial transaction tax as an own resource for the EU budget.
The decision followed an analysis of different tax instruments to make the financial sector contribute to the recovery of the EU economy.
Press Release - European Commission - 28 September 2011
Commission: Why is a financial transaction tax necessary at EU level?
A financial transaction tax is needed not only at EU level but at global level because financial markets are increasingly interconnected and have a global dimension. By proposing a financial transaction tax at EU level first, the Commission intends to be in a position to promote such a tax at global level in the framework of the G20.
The Commission has discussed the introduction of a financial transaction since 2009 on several occasions in the G20 (Pittsburgh, Toronto). With the support of the current French Presidency of the G20, the introduction of a financial transaction tax at global level could be on the table at the next G20 summit in Cannes on 3 and 4 November.
MEMO/11/640 - European Commission, 28 September 2011
Commission: Objectives of the FTT in the EU
- Ensure that the financial sector makes a fair contribution at a time of fiscal consolidation in the Member States; the financial sector is currently undertaxed vis-à-vis other sectors,
- Strengthen the EU Single Market by setting up a harmonised framework to tax financial transactions,
- this will help reduce competitive distortions,
- discourage potentially risky activities,
- complement regulatory measures aimed at avoiding future crises,
- and to promote common rules for the introduction of FTT at global level, notably through the G20.
The Commission Proposal for a Council Directive on a common system of FTT COM(2011) 594 of 28 September 2011 - Presentation
Commission: How will the tax work?
Who will be taxed?
The main taxpayers would be financial institutions operating financial transactions, i.e. banks, investment firms, other financial institutions like insurance companies, stockbrokers, pension funds, undertakings for collective investment in transferable securities, alternative investment funds like hedge funds, etc.
Which transactions will be covered?
The Commission has proposed that the tax would be levied on all transactions on financial instruments between financial institutions, if at least one of the financial institutions was deemed to be established in the European Union. The financial instruments in question would be products such as shares, bonds, derivatives and structured financial products. Whether transactions were carried out on organised markets or over the counter would not make any difference - in both cases they would be taxed.
Which transactions will be excluded from the proposed tax?
Only transactions related to financial instruments would be covered by the Commission's proposal. This means all transactions in which private households or SMEs were involved would fall out of the scope of the tax. For instance, house mortgages, bank borrowing by SMEs, or contributions to insurance contracts would not be included. Spot currency exchange transactions and the raising of capital by enterprises or public bodies, including e.g. public development banks through the issuance of bonds and shares on the primary market, would not be taxed either.
Why will the Commission propose a very wide tax base?
The Commission has proposed that the financial transaction tax would have the broadest basis possible in order to reduce the risks of tax avoidance and market relocation. The tax base would be defined on the basis of trading activities carried out by financial institutions. The financial instruments covered would include shares, bonds, their substitutes and related derivatives.
Which tax rates will be proposed?
In order to reduce the risk of market disruptions, the Commission has proposed to impose a very low tax rate on transactions. It has proposed a minimum tax rate for the trading of bonds and shares of 0.1% and 0.01% for derivative products. Member States would be free to apply higher rates. The tax would have to be paid by each party to a transaction.
Why will the Commission propose these specific rates?
The Commission has decided to propose minimum rates to mitigate the risk of relocation on the one hand and to guarantee revenue for the EU and Member States on the other hand.
Where will the tax be applied?
The tax would be applied on the territory of the 27 Member States of the European Union. It would apply to all financial transactions on condition that at least one party to the transaction were established in a Member State of the EU and that a financial institution established in the territory of the Member State concerned was party to the transaction.
In cases where EU countries applied a national tax on financial transactions, the tax would have to comply with EU rules. All EU countries would have to respect the minimum rates of taxation for the various transaction types.
How will the tax be applied in practice to a transaction?
Both parties to the transaction would pay their share of the tax in their country of residence or deemed residence.
How will such a tax interact with Member States' tax systems?
Belgium, Cyprus, France, Finland, Greece, Ireland, Italy, Romania, Poland and United Kingdom already have a form of financial transaction tax in place. They may have to modify their national rules to align them with the rules proposed by the Commission. This means Member States would have to apply the minimum rate and harmonise the tax base as provided by the EU rules on the financial transaction tax. Other Member States.
MEMO/11/640 - European Commission, 28 September 2011
Commission: Revenue raised by the financial transaction tax
What will the proceeds of a financial transaction tax be used for?
Like any other tax, a financial transaction tax can help to contribute to public finances, which is spent in the public interest. In the case of a financial transaction tax at EU level, part of it could go to the EU budget and another part could help to finance the budgets of Member States. Although it is general practice in the EU budget and in national budgets not to affect the proceeds of a tax to a particular policy, it should be noted that a fair share of the EU budget is devoted to growth and jobs, as well as addressing global challenges such as development and climate change.
How will the revenue be collected?
The tax would be paid immediately by financial institutions to Member States on the basis of the transactions undertaken, before netting and settlement. These are normally electronic transactions, in which case the tax would be paid the same day it was due. If the transaction is not processed electronically, the financial transaction tax would be due within three working days so as to allow the manual processing of transactions while avoiding unjustifiable cash-flow advantages.
The financial institutions that are liable to pay the financial transaction tax would have to submit a return to tax authorities. Member States would have to take appropriate measures to prevent tax evasion. Measures would include registration of financial institutions, accounting and reporting to ensure payment, keeping relevant data on financial transactions at the disposal of tax authorities and verifying the correct payment of the tax.
Are there estimates of how much money could be raised?
At a rate of 0.1% for bonds and shares and 0.01% for other kinds of transactions such as derivatives, the tax could raise approximately € 57 billion per year.
Why does the Commission propose to use part of the revenue generated by a financial transaction tax as a future own resource for the EU Budget?
In its proposal for the next financial framework (2014-2020), the Commission has proposed to introduce two new own resources: a tax on financial transactions and a modernized VAT resource. The new own resource system managed by the Commission would be made fairer as a more transparent link could be created between EU policy objectives and EU financing. The financial transaction tax could considerably reduce Member States' contributions and thus contribute to budgetary consolidation efforts in the Member States. It is estimated that by 2020, the new own resources could amount to almost half of EU budget revenue, while the share of Member Stat's GNI-based contributions will go down to around one third from over three quarters todayes would have to put in place the tax as proposed by the Commission.
Who will benefit and how?
All citizens and enterprises would benefit from this tax through extra public revenue which could be used for generating more economic growth and prosperity in the EU. The Member States would also benefit from this new public revenue stream both as direct financing for their own budgets and reduced contributions to the EU budget.
Finally, the financial transaction tax could become a new "own resource" for the European Union to finance its policies for the benefit of all.
MEMO/11/640 - European Commission, 28 September 2011
Commission: Mitigation of risks
How will the proposal mitigate the risk of the tax being passed on to consumers?
The Commission has proposed that the tax should cover only transactions where financial institutions are involved. The aim is to tax the financial sector, not their clients. The tax would aim at covering 85% of the transactions that take place between financial institutions.
However, in case private households and enterprises were to purchase or sell financial products, financial institutions could pass on the tax. For instance, for a purchase of shares to the value of €10 000 the bank could charge €10, which is not excessive.
What risks could the introduction of such a tax bring? What solutions are proposed to mitigate such risks?
The main risks would be incidence of the tax (i.e. who bears the final burden of the tax), relocation of financial institutions to other countries, economic distortions and potential loss of competitiveness. In order to mitigate these risks, the proposal provides for low tax rates (differentiated per product group), a very wide tax base, appropriate criteria to determine the territorial application of the tax (to tax at the place of establishment of the financial institution) and harmonised scope.
MEMO/11/640 - European Commission, 28 September 2011
Commission: When would the proposed tax enter into force?
The Commission has proposed that the tax should come into effect from 1st January 2014, but this depends on when the Council adopts the proposal.
MEMO/11/640 - European Commission, 28 September 2011
Articles
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20/01/2012
The Luxembourg funds industry continued to expand over the last 12 months despite the eurozone crisis and declines in major stock indices. The number of funds in Luxembourg rose by 4.84%1 to 3,833 and net sales amounted to €16.998bn. While total AUM decreased over the period by €101.453bn, mainly as a result of market depreciation, total assets under management were still a steady €2,059.419bn, second globally only to the US.
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16/01/2012
France wants the financial transactions tax to see the light of day, but there is no consensus in Europe on this topic. The Luxembourg Bankers’ Association (ABBL) is against such a tax if it will only be valid in few countries. Its CEO, Jean-Jacques Rommes, fears that business will go to competing finance centres. In an interview with LFF, he spoke about the efficiency of such a tax and the lessons we should learn from Sweden.
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10/01/2012
A very broad agreement in favour of an EU financial transaction tax emerged on 9 January 2012, at the start of the Economic and Monetary Affairs Committee's work on the legislative proposal. Spokespersons for Parliament's various political groups all advocated such a tax, at least throughout the Eurozone, and many deplored France's weekend hint that it could go it alone.
Glossary
More On
- Consultation Paper on Financial Sector Taxation (February 2011)
Want to know the next steps?
Last udpate February 2012
1999: Nicolas Sarkozy explique les nuisances d’une Taxe sur les transactions financières
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