Taxation – Withholding tax row erupts

Taxation - Withholding tax row erupts

Gordon Brown has poured scorn on European Commission plans to introduce a 20% tax on income from EU-based financial instruments.

In a closed meeting between ministers in Vienna at the weekend, Brown is understood to have told European tax commissioner Mario Monti such plans would be damaging to UK financial services.

A Treasury spokesman said Brown had gone ‘with an overall concern that proposals do not prejudice financial services in this country’.

Last week, Monti refused to offer exemption from the tax for eurobonds in a meeting with financial institutions in Brussels. He said exemption would lead to ‘an artificial distortion in the allocation of savings between different kinds of debt instruments’.

He attacked arguments by the eurobond industry that the directive could trigger gross-up provisions which would lead to early redemption. He said: ‘The clause in most eurobond issues applies to the agent and not the issuer and so the ‘gross-up’ clause appears to be very limited.’

UK insurance giant Prudential, which attended last week’s meeting, warned that the directive ‘should take into account the need to preserve the competitiveness of European financial markets in a global context.’

ACCA’s senior technical officer, Chas Roy-Chowdhury, said the directive had been accepted ‘fatalistically’ by institutions. He said: ‘They prefer the onerous task of withholding tax, preferably at a lower rate than the 20% proposed, rather than mountains of information to authorities.’

Related Articles

Supreme Court rules against Pimlico Plumbers in landmark employment case

Legal Supreme Court rules against Pimlico Plumbers in landmark employment case

1m Alia Shoaib, Reporter
Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

Personal Tax Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

3m Alia Shoaib, Reporter
Rent-a-room relief – the survey says…

Personal Tax Rent-a-room relief – the survey says…

4m Helen Thornley, ATT Technical Officer
What should the OTS prioritise in its review of inheritance tax?

Personal Tax What should the OTS prioritise in its review of inheritance tax?

6m Alia Shoaib, Reporter
LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

7m Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

8m Emma Smith, Managing Editor
HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

9m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

9m Emma Rawson, ATT Technical Officer