European Parliament Backs Transaction Tax

June 19, 2013 Taxation in EU

European ParliamentBRUSSELS – The European Parliament has agreed to support the implementation a financial transaction tax in Europe, but has offered suggestion for how to improve the tax.

On June 18th the Economic and Monetary Affairs Committee of the European Parliament voted and agreed to support the implementation of a multinational tax on financial transaction in Europe, a proposal which is currently in front of the European Commission.

Currently 11 countries of the EU are jointly working towards enacting an international tax on financial transactions, which is expected to be set at 0.1 percent on all trades involving stocks or bonds, as well as 0.01 percent on trades involving derivatives.

The European Parliament and the Economic and Monetary Affairs Committee do not have a direct influence on the implementation or planning of taxes in the EU, but do take a consultative role with EC on all matters concerning taxation.

The Committee gave its approval to the broad measures of the tax, but suggested that for the first three years following the introduction of the tax, the rate of tax charged should be reduced for any transactions involving sovereign bonds, small-cap stocks, or pension funds.

The Committee also indicated that payment of the tax should be a key step in obtaining ownership of the financial instrument, in order to prevent tax evasion.

Photo by ALDEADLE Alliance of Liberals and Democrats for EU