Financial Transaction Tax (FTT)
The introduction of the EU Financial Transaction Tax (FTT or Tobin Tax by reference to the Nobel Prize-winner economist) has been largely debated since the beginning of the 2008 crisis. Following the ECOFIN meetings held on 9 October and 13 November 2012, the EU Commission envisages now to introduce a FTT amongst a subset of EU Member States and a new draft directive is expected to be released shortly.
Where we are and where we are going to
Given the difficulty faced in achieving a common agreement between the 27 Member States, a subset of EU countries have decided to go ahead and to support the introduction of the FTT through the enhanced cooperation procedure. As of today, 11 Member States have sent official requests to the EU Commission for enhanced cooperation on an FTT (the “Participating Member States”) : Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. The Netherlands also confirmed that they may under certain conditions be interested in joining the Participating Member States.
The EU Commission considered that all legal conditions for such cooperation are met and on 23 October 2012 it proposed to EU Council to authorise the enhanced cooperation in the area of the FTT.
On 12 December 2012, the EU Parliament also gave its consent.
A Qualifying Majority Vote of the 27 Member States is now required at the level of the EU Council: in other words, the blessing of the non-Participating Member States, i.e. the one which will not be adopting the EU FTT (e.g. UK, Sweden etc.) will be necessary to move ahead. During the ECOFIN meeting held on 22 January 2013, the council adopted a decision authorising the 11 member states to proceed with the introduction of a FTT through "enhanced cooperation"
A subsequent proposal for a Directive should now be released shortly by the EU Commission for discussion and adoption by the Participating Member States.
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In favor of the enhanced co-operation for an EU FTT |
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Please, click on the countries of the map to get the contacts of our local FTT experts.
Austria | Belgium | Czech Republic | Denmark | Finland | Estonia | France | Germany | Greece | Ireland | Italy | Luxembourg | Netherlands | Portugal | Slovakia | Slovenia | Spain | Sweden | Switzerland | Russia | United Kingdom
The shape of the future tax
The proposal for a Directive should be largely based on the original draft directive published on 28 September 2011, even if some adjustments will be required to reflect the fact that only a subset of EU Member States is participating to this initiative. In other words, the tax should be mainly based on the location of the parties to the transaction (residence principle).
It is interesting to note that the EU Parliament already proposed in May 2012 some amendments to expand the scope of the original draft proposal for a EU FTT to cover the transfer of securities issued in the EU even if the parties to the transaction are both based outside the EU (issuance principle).
A patchwork of unilateral FTT across Europe
Aside the initiative of the EU Commission, several Member States across Europe have started to introduce or plan to introduce in their domestic legislations a transaction tax unilaterally, e.g. :
- France – effective from 1st August 2012
- Hungary – effective from 1st January 2013
- Italy – effective from 1st March 2013
- Spain and Portugal have all started the process to implement domestic FTTs
For further details, please refer to our local FTT newsletters.
Impact for Luxembourg
Even if Luxembourg is not part of the enhanced cooperation, its financial services industry will be impacted directly or indirectly depending on the shape of the future tax. It is therefore crucial that all Luxembourg players stay abreast of the latest EU developments and understand the basics of the new proposal once released by the Commission.
How Deloitte can help
Deloitte has developed a network of FTT experts across Europe to share their technical and industry experience and knowledge, but also to be in a position to assist efficiently financial institutions on a cross-border basis.
Our team is composed of both tax and consulting experts who will be able to assist you in assessing the impact of the tax on your business, in understanding the systems and processes changes required to identify taxable transactions and fulfill all reporting and payment requirements.
Contacts
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