Global FS tax newsflash: Green light for EU Financial Transaction Tax

As expected, on 22 January 2013 the ECOFIN Council (EU Finance Ministers) adopted a decision by qualified majority authorising 11 of the 27 EU Member States to proceed with the introduction of a harmonised EU FTT through Enhanced Cooperation in their countries. The Commission will now present a “new” substantive draft proposal on the FTT within the next few weeks which is expected to be largely the same as its original proposal released in September 2011. Negotiations will then begin between Member States on the final shape of the EU FTT. This period represents an opportunity for lobbying.
Read this newsflash for more details.

The 11 Member States that have opted for Enhanced Cooperation are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain.

The Czech Republic, Luxembourg, Malta and the United Kingdom abstained in the ECOFIN authorisation vote.

The Netherlands has recently reiterated its interest in joining Enhanced Cooperation. However, this is provided that the pension funds sector is exempted from the tax. An exemption for pension funds was supported by the European Parliament in its May 2012 opinion on the FTT, and there are indications that Germany and Italy might also be willing to agree to this. However, resistance remains from other countries in support of the EU FTT, for example France. Accordingly, the Dutch participation in the process remains uncertain.

There are indications that some countries which were considering implementing their own domestic FTT (e.g. Spain) appear to be pulling back from this in anticipation of the EU FTT now moving ahead within a relatively short timeframe. However, given the negotiations which will be required to reach agreement on the final shape of the EU FTT, the start date of 1 January 2014 proposed by the European Commission appears very challenging.