Europe accelerates ruling on UK Financial Transaction Tax challenge
The European Court of Justice has brought forward to next week (30 April) its ruling on the UK’s challenge to the proposed EU Financial Transaction Tax (FTT). The challenge was raised by George Osborne in May 2013, and seeks to block the introduction of FTT on the grounds that it plans to tax share, bond and derivative trading beyond the borders of the 11 EU member states that are backing the new levy.
Accelerating the FTT ruling’s timetable will alarm opponents
The ECJ had been expected to rule on the extra-territorial element of FTT sometime in 2015, but has now by-passed the normal advice process from the advocate-general and will not hold a hearing.
This accelerated timetable will alarm the UK and other countries which have voiced concern over the wide range of the tax – including Sweden, the Netherlands and Denmark. Their view is that 11 countries seeking to implement the tax under the Enhanced Cooperation option of the EU have overstepped the reach of the mechanism by requiring non-participating countries to assist in taxing transactions in their jurisdictions. The countries that have signed up to the tax include Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. Under the FTT, derivative tax rates will be 0.01 per cent and a tax rate of 0.1 per cent will imposed on shares and bonds.
Richard Asquith, Head of Tax, TMF Group, commented: "The change in the ECJ timetable is aimed at coinciding with the next Ecofin meeting in May when the Greek presidency will hope to gain agreement between the 11 member states pushing FTT, and a final decision on including derivatives. A number of countries had expressed doubts on the impact of taxing derivatives on corporate borrowing. There could then be a final agreement on the scope of the tax by June."