Proposal for a Council Directive implementing enhanced cooperation in the area of financial transaction tax

The recent global economic and financial crisis had a serious impact on our economies and public finances. The financial sector has played a major role in causing the economic crisis whilst governments and European citizens at large have borne the cost. There is a strong consensus within Europe and internationally that the financial sector should contribute more fairly given the costs of dealing with the crisis and the current under-taxation of the sector. Several EU Member States have already taken divergent action in the area of financial sector taxation.

Therefore, on 28 September 2011 the Commission tabled a proposal for a Council Directive on a common system of financial transaction tax (FTT) and amending Directive 2008/7/EC. The legal basis for the proposed Council Directive was Article 113 TFEU, as the proposed provisions aim at the harmonisation of legislation concerning the taxation of financial transactions to the extent necessary to ensure the proper functioning of the internal market for transactions in financial instruments and to avoid distortion of competition. This legal basis prescribes Council unanimity in accordance with a special legislative procedure, after consulting the European Parliament and the Economic and Social Committee.

The main objectives of this proposal were:

– harmonising legislation concerning indirect taxation on financial transactions, which is needed to ensure the proper functioning of the internal market for transactions in financial instruments and to avoid distortion of competition between financial instruments, actors and market places across the European Union, and at the same time

– ensuring that financial institutions make a fair and substantial contribution to covering the costs of the recent crisis and creating a level playing field with other sectors from a taxation point of view, and

– creating appropriate disincentives for transactions that do not enhance the efficiency of financial markets thereby complementing regulatory measures to avoid future crises.

ESO: Background information: Financial transaction tax under enhanced cooperation: Commission sets out the details http://www.europeansources.info/record/press-release-financial-transaction-tax-under-enhanced-cooperation-commission-sets-out-the-details/

EUR-Lex: COM(2013)71: Follow the progress of this proposal through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2013:071:FIN

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