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.
Today, the European Commission adopted a proposal for a Council Directive implementing enhanced cooperation in the area of financial transaction tax, which mirrors the scope and objectives of its original FTT proposal of September 2011.
Individual country positions
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.
New FTT proposal released
The details of the Financial Transaction Tax to be implemented under enhanced cooperation have been set out in a proposal adopted today by the European Commission. In its press release, the Commission states that, as requested by the 11 Member States, that will proceed with this tax, the proposed Directive mirrors the scope and objectives of the original FTT proposal put forward in September 2011. The approach of taxing all transactions with an established link to the FTT-zone is maintained, as are the rates of 0.1% for shares and bonds and 0.01% for derivatives. There are certain limited changes in today’s FTT proposal compared to the original one, to take into account the fact that the tax will be implemented on a smaller geographical scale than originally foreseen. These changes are mainly to ensure legal clarity and to reinforce anti-avoidance and anti-abuse provisions.
More information on the content of the proposal of Directive
- A first technical Council working group meeting on FTT is tentatively scheduled for the second half of February 2013.
- These technical meetings are chaired by the Irish EU Presidency, with all 27 EU Member States present at these meetings. These discussions will therefore be an open and transparent process.
- After the technical work has been completed, the proposal will move up within the Council to the political level. The timing of this next stage will depend on the Irish EU Presidency and, likely, Germany and France.
- Only the (now 11) Member States, which have formally requested to the Commission to join the Enhanced Cooperation on FTT, have the right to participate in the final vote at Council political level (i.e. in the COREPER and ECOFIN meetings) on the final shape of the harmonised FTT.
- Throughout the Enhanced Cooperation Process, Member States can send a formal request to the Commission to join the core group of 11 Member States.
- We do not expect political agreement on the final shape of the EU wide FTT in the coming months. However, potential developments in FTTs at local country level will also need to be watched carefully.