The EU financial transaction tax (FTT) has always been deeply divisive; the one constant has been strong support from the EU institutions. But now nine months after the EU Council authorised the FTT to proceed its own Legal Service has opined that it is unlawful. How did we get to this point? And what future if any is there for the tax?
The recent history of the FTT starts with the Commission’s proposal in late 2011 (see Proposal for a Council Directive on a common system of financial transaction tax and amending Directive 2008/7/EC (COM(2011) 594 final)). The tax applied (broadly speaking) to a ‘financial transaction’ entered into by a ‘financial institution’ which was ‘established’ in the EU. Each term was given an unusually wide definition.
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