Financial Transaction Tax

On 14 February 2013 the European Commission adopted a proposal for a Council Directive implementing enhanced cooperation in the area of financial transaction tax, which reflected the scope and objectives of its original FTT proposal of September 2011. This follows the decision of the Council on 22 January 2013 to authorise enhanced cooperation between 10 Member States (Austria, Belgium, Estonia, France, Germany, Italy, Portugal, Slovakia, Slovenia and Spain). Luxembourg decided not to participate in the enhanced cooperation on introducing an FTT.

According to the European Commission, the three core objectives of the FTT are:

  • to strengthen the Single Market by reducing the number of divergent national approaches to financial transaction taxation,
  • to ensure that the financial sector makes a fair and substantial contribution to public revenues,
  • to support regulatory measures in encouraging the financial sector to engage in more responsible activities, geared towards the real economy.

As of January 2015, the proposed Directive has been discussed by Member States for nearly two years without an agreement been reached among Participating Member States due to divergence of views with respect to the scope of the tax. Recent declarations at the highest political level, notably on the part of France, indicate though that a breakthrough remains possible on this dossier. The declared ambition of the Member States participating to the enhanced cooperation is to have a tax with the widest possible base and low rates with a starting date set on 1 January 2016.