UK and International Tax news
Financial Transaction Tax – Enhanced Cooperation
Thursday 24th January 2013
Further to our International Tax News item of 23 October 2012, in which we advised that the EC had announced that the ten member states who wished to apply an EU financial transaction tax (FTT) through enhanced cooperation should be allowed to do so, the EC has recently adopted a decision authorising 11 member states to proceed with the introduction of a FTT through “enhanced cooperation”.
The 11 countries are Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia.
The EC will now make a proposal defining the substance of the enhanced cooperation, which will have to be adopted by unanimous agreement of the participating member states.
Discussions on a 2011 proposal aimed at introducing an FTT throughout the EU received insufficient support within the Council. That proposal involved a harmonised minimum 0.1% tax rate for transactions in all types of financial instruments except derivatives (0.01% rate).
In September and October 2011, the 11 member states wrote to the EC requesting a proposal for enhanced cooperation, specifying that the scope and objective of the FTT be based on the 2011 proposal.
This is only the third time that an enhanced cooperation has been launched to allow a limited number of member states to proceed with a particular measure, and the first time in the area of taxation. Requirements for enhanced cooperation are laid down in article 20 TEU and articles 326 to 334 TFEU. In particular, it must be established that the objectives cannot be attained within a reasonable period by the EU as a whole. At least nine member states must participate, and the cooperation must remain open for any others that wish to join.Contact Us