The financial transaction tax inches closer, write Richard Croker and Anna Burchner (CMS Cameron McKenna)
On 31 October 2014, a note from its president to the Council of the EU was issued, drawing attention to the limited progress that has been made in relation to the FTT since the ECOFIN Council Meeting in May 2014. At the May meeting, ministers of ten of the 11 participating member states committed to finalising viable solutions for the FTT by the end of 2014 and implementing the FTT progressively, with the taxation of transactions in shares and certain types of derivatives being the ‘first step’ by the end of 2015.
The note includes proposals for:
These proposals mark progress towards introducing the tax on share transactions initially.
However, the note acknowledges no consensus among member states on the types of derivatives which would fall within the FTT or on the application of the key ‘issuance’ and ‘residence’ principles in the collection of the FTT and in revenue allocation between member states.
Since there does not even appear to be agreement on whether or not to tax equity derivatives (which one might expect proponents of the tax to envisage, alongside the charge on share transactions), including any kind of derivatives within the ‘first step’ as originally intended may prove to be problematic.
A number of critical issues concerning the design of the FTT regime therefore remain unresolved by the participating countries. It remains to be seen whether a viable proposal can be put forward by the end of 2014.
Taken from a client briefing issued on Law-Now.com
The note is available to view. It invites the EU Council is to give indications on the way forward, with a view to resolving the issues set out in this report, and mandates the Working Party on Indirect Taxation and the Committee of Permanent Representatives to finalise drafting of the compromise legislative text.
The financial transaction tax inches closer, write Richard Croker and Anna Burchner (CMS Cameron McKenna)
On 31 October 2014, a note from its president to the Council of the EU was issued, drawing attention to the limited progress that has been made in relation to the FTT since the ECOFIN Council Meeting in May 2014. At the May meeting, ministers of ten of the 11 participating member states committed to finalising viable solutions for the FTT by the end of 2014 and implementing the FTT progressively, with the taxation of transactions in shares and certain types of derivatives being the ‘first step’ by the end of 2015.
The note includes proposals for:
These proposals mark progress towards introducing the tax on share transactions initially.
However, the note acknowledges no consensus among member states on the types of derivatives which would fall within the FTT or on the application of the key ‘issuance’ and ‘residence’ principles in the collection of the FTT and in revenue allocation between member states.
Since there does not even appear to be agreement on whether or not to tax equity derivatives (which one might expect proponents of the tax to envisage, alongside the charge on share transactions), including any kind of derivatives within the ‘first step’ as originally intended may prove to be problematic.
A number of critical issues concerning the design of the FTT regime therefore remain unresolved by the participating countries. It remains to be seen whether a viable proposal can be put forward by the end of 2014.
Taken from a client briefing issued on Law-Now.com
The note is available to view. It invites the EU Council is to give indications on the way forward, with a view to resolving the issues set out in this report, and mandates the Working Party on Indirect Taxation and the Committee of Permanent Representatives to finalise drafting of the compromise legislative text.