9th May 2014

FTT deal closing in

Finance ministers of the 11 Member States that decided to proceed under the enhanced cooperation mechanism to adopt a Financial Transaction Tax are close to striking a deal after last week´s discussions. As the European Court of Justice rejected UK´s ruling against it, there is but details standing in the FTT´s way. One of such details is a schedule for the deployment of the tax. According to the German finance minister Wolfgang Schauble, the tax should be introduced gradually in 2016. Called for since the 2008/09 financial crisis, the FTT has been regularly on debate schedule among finance ministers. The agreed version of this so-called Robin Hood tax includes a 0.1% levy on shares and bonds and 0.01% on certain derivatives. This limited scope is, according to Schauble, also part of the step-by-step tactics of gradual adoption. According to its supporters, this is a very limited tax. FTT with these characteristics should bring around €30 billion to the FTT-11 budgets, which is close to symbolical. Also, a 0.1% tax will not curb market behavior towards a more responsible one to avoid crises as the 2008/09 one, which was originally one of the main motivations for the adoption of such tax. As presented, the FTT is not much more than a symbolic political gesture. Even so, however, countries led by the UK strongly oppose the levy. However, the final deal of the FTT-11 is expected before the EP elections later this month.

At the ECOFIN meeting of 6 May, the finance ministers discussed also some amendments to the parent-subsidiary directive in order to prevent tax avoidance, the in-depth reviews of the macroeconomic imbalance procedure presented by the Commission and adopted the bank resolution directive.

For more, click here and here.

Members of the American Chamber of Commerce in the Czech Republic