Eu financial transaction tax pdf

The persons subject to tax, the tax rate, and inscope. Between september 28 and october 23 of 2012, 11 eu member countries formally indicated to the european commission they wished to proceed withthat a financial transaction tax using the. Nonetheless, on 29 june 2011, the ftt was included in the proposal on the system of own resources of the european union com 2011 510, s. We focus on analyzing the revenue potential of the inclusive prosperity act that was introduced in the u. Impact analysis of foreign exchange markets, evaluates the impact of the proposed financial transaction tax on european fx markets, estimating its impact on fx cash and derivatives users. An overview of the proposed eu financial transaction tax.

A financial transactions tax is a lovely idea but it does have one rather large failure in that it doesnt in fact gain any extra tax revenue, far from it it reduces total collections. Transactions of financial instruments if at least one of the parties in the transaction is established in. A tax on savers 1 for example, germanys collation partners the cdu and spd agreed to support an eu financial transaction tax via the ecp without having negative effects on. Proposals to introduce financial transactions taxes in the uk and the eu have been around for a while. The countries currently participating in the implementation of the ftt are. The proposal is targeted at the financial services sector but would impose direct and indirect costs to the real economy. Pdf financial transaction taxes in the european union. In september 2011, the eu commission published a draft directive for the introduction of an eu wide financial transaction tax ftt. Previous studies2 have shown that introducing an ftt results in the primary impacts of an.

Compare financial transaction taxes in europe, in the eu, and in the oecd with a new map. This alert covers some key issues and questions arising from the uks challenge. Statement on the financial transaction tax in europe. Brexit kicks eu financial transaction tax into the long grass. The famous statement of german chancellor konrad adenauer could well have been repeated by french president emanuel macron with his decision to initiate a postponement in introducing the european financial transaction tax eftt. The merits and demerits of financial transaction taxes have been heavily debated among economists, who remain divided on the effects of the taxes on trading volumes, market liquidity, and quotes. In its later years, the tax was similar in some respects to that proposed by harkin and defazio.

We aim to quantify the impacts of the ftt on fx cash and derivative markets, both in terms of the transaction costs and the effects on the participants in these markets. This proposed, but never enacted, currency transaction tax was meant to eliminate exchange rate differentials among countries across the globe. Therefore, 11 euro area countries have decided to move ahead on their. After lobbying from france and germany, the european commission published a draft directive on a common system of financial transaction tax on 28 september 2011. Deeper and fairer internal market with a strengthened industrial base taxation. Aug 28, 2017 a financial transactions tax is a lovely idea but it does have one rather large failure in that it doesnt in fact gain any extra tax revenue, far from it it reduces total collections. Eu approves financial transaction tax for 11 eurozone. Investment funds performance and financial transactions tax. The development of a common system of financial transaction tax in the eu reduces the risk of distortion of markets through a taxationinduced geographical delocalisation of 1 com2011 594 final. The report, proposed eu commission financial transaction tax. European parliament voted 360299 in favor of introducing financial transactions taxes at the european union level. Financial transaction taxes in the european union national tax. Which european countries impose a financial transaction tax ftt. A tax on savers 1 for example, germanys collation partners the cdu and spd agreed to support an eu financial transaction tax via the ecp without having negative effects on instruments for retirement savings, small investors and the real economy.

Financial transaction taxes in europe tax foundation. Above and beyond the lasting direct reduction of the tax base, a financial transaction tax would result in particularly rapid and effective legal avoidance measures on the part of major market participants. The case for a financial transaction tax bloomberg. In 2011, the european commission put forth a legislative proposal for a common system of financial transaction taxes in the european union. Effects of a financial transaction tax modern markets. Since the financial crisis, there has been frequent talk of the introduction of a financial transaction tax. Ecofin discusses financial transaction tax kpmg global. The european commission expects its proposed eu financial transaction tax of 0. Certain terms may denote that the tax applies to select instruments, such as the uks stamp duty reserve tax, which is. Eu tries to revive plan for financial transaction tax. To tackle fragmentation of the single market that an uncoordinated patchwork of national financial transaction taxes would create. The eu financial transaction tax eu ftt is a proposal made by the european commission in september 2011 to introduce a financial transaction tax within the 27 member states of the european union by 2014. Jun 20, 2019 its not as if this were radical socialism. The eu financial transactions tax april 2012 proposal.

The following is an overview of how each european state has designed their respective ftts. This tax, often referred to as tobin tax after its original advocator, james tobin, in the 1970s, would impose a levy on. The proposal was to harmonise the tax base and set minimum rates for all transactions on secondary financial markets, once at least one eu party financial institution was involved in this transaction. An overview of the proposed eu financial transaction tax pdf 445 kb. The proposal involves a transaction based tax of 0. European union financial transaction tax wikipedia. In october 2010 the european commission published a communication on the relative merits of an ftt and a financial activities tax as means of taxing the sector. The revenue potential of a financial transaction tax for u. Established local financial transaction type taxes in europe 6 a global view of financial transaction taxes. Nov, 2018 although some dismiss a financial transaction tax as an idea that has been discussed and dismissed many times, the same was said in europe, where 10 eu countries are poised on the brink of instituting an ftt. It is synonymous with other terms such as securities transaction tax and securities transfer tax. Certain terms may denote that the tax applies to select instruments, such as the uks stamp duty reserve tax, which is levied on shares.

After an initial proposal in 2011 was blocked by member governments, a group of states pressed ahead, while the majority of the 28 eu states backed down. A financial transaction tax is one of several names for a tax on financial assets. We explore issues related to a financial transaction tax ftt in the united states. The proposed eu financial transaction tax would be separate from a bank levy, or a resolution levy, which some governments are proposing. Financial transaction tax kpmg global kpmg international. Eu financial transaction tax financial transaction taxes. Financial transaction tax y 2021, germany b announces. Financial transaction tax the impact of a financial. Financial transaction tax kpmgs eu ftt resources and contacts eu core ftt team barry larking director, kpmgseu tax centre tel.

This paper estimates the revenue potential of a financial transaction tax ftt for u. Plans for an eu financial transaction tax ftt have stumbled over the past years. The member states participating in the enhanced cooperationftt procedure austria, belgium, france, germany, greece, italy, portugal, slovakia, slovenia. President sarkozy is clearly committed to introducing some form of financial transaction tax, perhaps hoping that other member states will follow his lead. Worldwide there are approximately 20 regimes for taxing securities transactions, not including bank levy or withholding tax. In a meeting held on june 14, 2019, the economic and financial affairs council of the eu ecofin received an update, from the ten member states participating in the socalled enhanced cooperation procedure, on the latest developments regarding the financial transaction tax ftt. Since, however, ftt is imposed on a gross basis on. Although some dismiss a financial transaction tax as an idea that has been discussed and dismissed many times, the same was said in europe, where 10 eu countries are poised on the brink of instituting an ftt. Sep 16, 2017 the 10 european union countries still plotting a tax on financial transactions tied the proposals fate to the outcome of the brexit negotiations, pushing any decision on the sixyearold plan. Making the financial sector pay its fair share brussels, 28 september 2011 today the commission has presented a proposal for a financial transaction tax in the 27 member states of the european union. Todays map shows which european oecd countries impose a type of ftt. Investment funds performance and financial transactions tax an equation with multiple unknowns on 14 february 20, the european commission published its revised proposal for an eu financial transactions tax eu ftt1, which is expected to generate approximately 30 to 35 billion per year tax perspective 1 com20 71 final.

Meanwhile, french president nicolas sarkozy, current chair of the g20, is continuing to push the ftt in that body. The tax may be assessed on the buyer, the seller, or both, and is typically an ad valorem tax, that is, a percentage of the market value of the security sometimes the tax may be expressed in basis points. The council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 1 thereof, having regard to council decision 2052 eu of 22 january 20 authorising enhanced cooperation in the area of financial. Ftts are levied on the trade in financial instruments such as stocks, bonds, or derivatives. Broadly, the ftt is a proposal to tax each secondary financial transaction involving shares, bonds and the entering into and secondary trading of derivatives where there is a link to at least one of the eu member states which implement the tax. It also details the proposals made by the european commission. Given the difficulty faced in achieving a common agreement between the 27 member states, the eu commission decided in 2012 to try to introduce this tax through the enhanced cooperation procedure ecp. Other solutions are taxation at the place of transaction or taxation at the place of issuance of the financial instrument.

The european union financial transaction tax eu ftt is a proposal made by the european commission to introduce a financial transaction tax ftt within some of the member states of the european union eu the proposed eu financial transaction tax would be separate from a bank levy, or a resolution levy, which some governments are proposing to impose on banks to insure them against the. A proposed harmonized tax on transactions in financial instruments proposed for eu member states in 2011. The european union financial transaction tax eu ftt is a proposal made by the european commission to introduce a financial transaction tax ftt within. A ftt is simply a tax imposed on a financial transaction, usually the purchase and or sale of securities. The merits and demerits of financial transaction taxes have been heavily debated among economists, who remain divided on the effects of the taxes on trading volumes, market liquidity, and quotes volatility. Oct 15, 2019 uk financial transaction tax under labour. A europewide financial transaction tax ftt was initially proposed by the european commission ec in september 2011 with the following objectives.

The original concept behind modern financial transaction taxes ftt was the tobin tax. An alternative model which was incorporated in the september 2011 draft eu directive taxes a financial institution based on where it, or the ftts will fundamentally change the tax landscape for financial institutionsthe eu commission has. The latest information on the eus ftt proposal and various country ftts. In september 2011, the european commission initially proposed that a financial transaction tax ftt be implemented by all 27 eu member states, although it soon became clear that a s ignificant proportion of the member states would not agree to implement a tax of the nature proposed. Spain sends bill on financial transaction tax to parliament. Eu financial transaction tax financial transaction taxes in. The debate on financial transaction taxes ftt in the european union eu and on the international level imf, 2010a,b is an example of this latter strand. The tax would be levied on all transactions on financial instruments between financial. The main objective of this qualitative research paper is to consider the extent to. Macron and the eu financial transaction tax christian. Ecofin discusses financial transaction tax and removes. Peri the revenue potential of a financial transaction tax.

Hong kong, perennially rated the worlds freest economy by the conservative heritage foundation, has had a 0. Eu proposed financial transaction tax fortune or folly. Financial transaction tax legislative train schedule european. France adopted an ftt in 2012 that will be integrated with the eu tax if and. Although neither tax has yet come close to becoming law, political turbulence could now make this more likely. Since the 2008 financial crisis, financial transaction taxes ftts have been debated as a potential instrument to address financial market instabilities and as a source for tax revenue. The countries currently participating in the implementation of the. Jan 22, 20 eleven countries won the eu s backing for a financial transaction tax ftt, with germany, france, italy and spain adding their names to eurozone neighbours austria, portugal, belgium, estonia. It was submitted to the chair of the german delegation in connection with the corresponding item on the agenda for the ecofin meeting on 14 june 2019, to be prepared in coreper on 12 june 2019. Following the apparent lapse in the effort to progress with the proposed eu ftt, there has now been some movement indicating a fresh push into the forefront of the agendas of the 11 eu member states in consideration. Taxation at the place of establishment of the financial institution was believed to result in a lower degree of concentration of tax revenue and to offer more possibilities to limit tax.

The eu financial transactions tax latest developments this is the third in our series of newsflashes regarding the proposed introduction of a financial transactions tax ftt within the eu. Little attention has been paid to the fact that the united states had a financial transaction tax in place from 1914 to 1965. A financial transaction tax for 11 eu countries in the wake of the financial crisis, the idea of. Compare financial transaction taxes in europe and in the oecd with a new map. Global financial markets the financial transaction tax ftt that 11 eu members including germany, france, italy and spain are planning to implement in january 2014 is misguided, counterproductive and badly designed. The eu commissions proposal for a financial transaction tax. In this newsflash we focus on how the debate has developed since december at the level of the eu, including the latest position across the member states. Several european countries have already enacted taxes on financial transactions. The original tobin proposal was meant to maintain the benefits capital markets bring to investors and economies. The history of the proposal on financial transaction tax.

Ecofin discusses financial transaction tax and removes dominica from the eu blacklist ecofin financial transaction tax france germany enhanced cooperation eu blacklist in a meeting held on june 14, 2019, the economic and financial affairs council of the eu ecofin received an update, from the ten member states participating in. The european union financial transaction tax eu ftt is a proposal made by the european commission to introduce a financial transaction tax ftt within some of the member states of the european union eu. The tax would be levied on all securities and derivative transactions executed within the eu. European oecd countries with a financial transaction tax ftt. Financial transaction tax ftt is a generic name for taxes that are levied on transactions such as the sale and purchase of some sort of financial instrument such as stocks, shares or fx transactions. The debate on financial transaction taxes ftt in the european union eu and on the. The revised proposal refers to a financial transaction tax that would be levied at a minimum standard rate of 0.