Over the years, the EUFTT has been a hot topic in Europe. However, a joint agreement has long been unattainable by the member states as they could not agree on the height and scope of the tax. In the meantime France and Italy individually introduced a financial transaction tax awaiting a formal decision from the EC.
23 Sep 2019
Since 2012 eleven countries worked together, based upon the enhanced cooperation which requires at least nine member states to participate. The aim is to introduce a financial transaction tax. In the European union enhanced cooperation is a procedure where a minimum of nine EU members are allowed to establish advanced integration or cooperation in an area within EU structures but without the other members being involved. Last year Estonia dropped out from the negotiations and the remaining ten member states moved forward. The Netherlands is not one of them since we feel that pension funds should be exempted, and this exemption is not part of the current proposal.
Information from late 2018 indicates that an introduction of the European Financial Transaction Tax (EUFTT) would be similar to the one introduced by France in 2012. The French transaction tax has a minimum rate of 0.2% on shares of companies with a € 1bn market capitalization.
It was suggested that the restricted form of the EUFTT would apply to:
- Transfer of securities in larger publicly traded companies only;
- The imposition of the tax may be linked to the transfer of ownership in the local trading venue
- Derivatives and non-equity securities would be excluded from the scope of this new EUFTT proposal; and
- There may be a range of other exemptions, such as intra-day transactions.
According to the information received, the ten member states taking part in the enhanced cooperation (ECP), have now agreed to the broad terms of the EUFTT and France and Germany were expected to propose an implementation date of 2021. It is expected that the ten member states supporting the current proposals will push for a formal agreement in October.
One of the remaining issues is the method by which revenues from the EUFTT will be split amongst participating member states.