Financial Transaction Tax Finally Revealed

February 15, 2013 International Tax Cooperation

European UnionBRUSSELS – Financial institutions and traders across Europe could soon be paying out up to EUR 35 billion in a new tax on financial transactions.

After more than a year of debates and discussions the European Commission came forward on February 14th with a proposed plan for the implementation of a multinational tax on financial transactions in Europe.

The proposed plan comes following a request for enhanced cooperation on the matter from 11 countries which were willing it implement the measure if it was approved by the EU.

Explaining the significance of the new plan, the European Commissioner for Taxation Algirdas Šemeta said “…with today’s proposal, everything is in place to enable a common Financial Transaction Tax to be become a reality in the EU. On the table is an unquestionably fair and technically sound tax, which will strengthen our Single Market and temper irresponsible trading.”

Currently the governments of Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia  and Spain have confirmed their support of the tax and their intention to implement it.

When enacted, the tax will be levied at 0.1 percent on all transactions involving shares and bonds, and at 0.01 percent on all transactions involving derivatives, and could raise up to EUR 35 billion a year in extra tax revenues.

The 11 countries will now have an opportunity to discuss the tax and vote on its implementation, and if the measure receives unanimous approval from all the countries, it can be launched.

In an effort to ensure that the tax is effectively applied across Europe, the tax will be levied on all transactions bound into or out of the 11 participating countries, and will not be restricted to transactions where both parties a located in the 11 countries.

Photo by Dogfael