European Commission Could Delay FTT
26 June 2013
Posted by: Author: Ulrika Lomas
Author: Ulrika Lomas
The European Commission has said that its proposed financial transaction tax (FTT) "could still enter into force towards the middle of 2014," hinting at a six month postponement from the original January, 2014 start date.
The Commission's admission was rather un-ceremoniously tucked away in an update to its web pages late last week. Detailing the progress of the Commission's recommendation for a levy of 0.1 percent on the trading of shares and bonds and 0.01 percent on derivatives, the new FTT information page concludes with a brief explanation of "the way ahead."
The Commission notes that "Once agreed upon at European level, participating Member States will have to transpose the [Commission's] Directive into national legislation. If agreement is found before the end of 2013, and there is a speedy transposition into national law by the participating Member States, this common framework for an FTT could still enter into force towards the middle of 2014."
Earlier this month, Tax Commissioner Algirdas Šemeta was forced to deny reports that a "scale back" of the FTT was on the cards. It had been thought that the tax on trading bonds and shares would drop from 0.1 percent to 0.01 percent, while a climb-down over the timetable for implementation was also thought likely, with only shares to be affected from January next year.
Šemeta said at the time that it was "really premature to say what will be the final outcome of the situation, because member states are currently in the phase of the first reading. … It's normal in the first reading that member states go through the proposal article by article and the Commission explains what each provision means." He stressed that the talks were "taking place in a constructive mood and there are various technical ideas on how to make it [the proposal] better."
Commenting on the situation, Richard Asquith, Head of Tax at TMF Group, said: "This tax has been rushed in design and implementation, so a delay of at least six months would be no surprise. The countries involved will have to listen more closely to the markets and other countries if they are to get this right."
France, Germany, Belgium, Spain, Portugal, Italy, Austria, Estonia, Greece, Slovakia, and Slovenia are the eleven countries to sign up to use the Commission's "enhanced cooperation" procedure as a means of introducing the FTT. Enhanced cooperation allows those European Union member states that wishing to work more closely together, to do so..