Great Britain and Sweden attacked those EU Member States that are calling for a Financial Transaction Tax (FTT) after they announced that they were planning to finally levy the tax during yesterday’s (May 6) meeting of European finance ministers in Brussels. Spain, Slovakia, Italy, Portugal, Greece, Estonia, Austria, Belgium, Germany, and France announced that they would implement tax on stock, shares, and some financial derivatives by 1 January 2016 at the latest. Slovenia, the 11th member of the pro-FTT club, did not sign the joint agreement as it is without a government for the time being.
The ten countries said that any viable solutions to introduce the FTT must be finalized by the end of this year so that more derivatives and financial instruments can be subsequently added overtime. Participating Member States could levy taxes on initial financial instruments in order to maintain their existing tax system. Italy, for instance, has already introduced taxes on a number of different derivatives. The meeting of finance ministers however did not conclude where the FTT should be paid.
The EU Commission suggested in its seminal 2011 proposal that the tax should be paid to both countries if a transaction was cross-border between the two countries involved. Such a solution can now force a non-FTT state to collect revenues on behalf of a FTT-participating state. At the meeting, Stockholm decided not to support a compromise to close a tax loophole on hybrid loan arrangements over fears that it could cause harm to a certain type of Swedish companies, a model that is endorsed by Sweden’s top corporations.
