Financial transaction tax illegal, warn lawyers

by Calum Fuller

More from this author

11 Sep 2013

  • Comments
EU flag

THE IMPOSITION of a financial transaction tax (FTT) across 11 EU nations would be illegal, according to lawyers from the countries.

The proposals will see a 0.1% tax on the value of stocks or bonds and 0.01% on derivative contracts and is poised to be introduced across 11 EU countries including France, Germany, Italy and Spain, with the intention of curbing risk-taking, the Financial Times reports.

In a 14-page legal opinion, the lawyers said the measure would exceed the member states' tax powers, adding such a move "infringes upon the taxing competences of non-participating member states", making it incompatible with the EU treaty.

The fact that its introduction would not be EU-wide - the UK and Sweden in particular are staunchly opposed - means the move would be "discriminatory and likely to lead to distortion of competition to the detriment of non-participating member states", the document from the EU Council Legal Service said.

As the assessment is not legally binding, the countries concerned are free to press ahead, but it serves as a warning that, should it come to court, it would in all likelihood be defeated.

Concerns have been raised previously, with a memo from civil servants of the participating nations leaked to think tank Open Europe raising a litany of questions over how the collection of revenues would work in practice, and warning the tax would introduce additional and unsustainable costs for participants in the bonds market.

More recently, the International Securities Lending Association (ISLA) claimed the proposed levy will eradicate 65% of lending activity in Europe, slashing the €3bn (£2.6bn) annual windfall revenues earned by long-term asset owners including pension funds and mutual funds by more than €2bn.

The CBI's head of financial services and corporate Leo Ringer said: "This opinion recognises that the FTT would have damaging implications for growth, jobs and investment beyond the member states involved, so now is the time to draw a line under this flawed proposal.

"It also makes clear that moves towards further integration between a number of EU countries can't be taken forward if they impact on the rights of all member states, unless all states affected have signed up."

Visitor comments

blog comments powered by Disqus

Add your comment

We won't publish your address

By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

  • Send


Financial Planner

The Ministry of Defence Surgeon General’s (SG) Finance Department, Lichfield, Staffordshire, Permanent, Full Time, £ £30,008




Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials


Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you



Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.


iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.