The European Union will implement a financial transaction tax by January 1, 2016, announced the E.U. Economic and Financial Affairs Council (ECOFIN), a delay from earlier target dates anticipated by the European Commission. But, said E.U. Tax Commissioner Algirdas Semeta, while it is true that the plan and pace are less ambitious than the Commission had proposed, every step forward on the financial transaction tax is of significance. The E.U. financial transaction tax will be the first regional financial transaction tax in the world. It has three core objectives. First, it will strengthen the Single Market by avoiding a patchwork of national taxes, he added, and, second, it will ensure that the financial sector makes a fairer contribution to public finances. Third, will support regulatory measures in encouraging the financial sector to engage in more responsible activities, geared towards the real economy. Since enhanced cooperation to effect the tax was launched by eleven E.U. Member States, there have been a number of technical working groups to discuss the proposal, involving all 28 Member States, as well as meetings between just the 11 Member States involved.
In a joint statement, the Ministers of E.U. member states participating in enhanced cooperation to do a financial transaction tax said that they will create a harmonized taxation regime to tax financial transactions. The Council Working Group has reviewed the European Commission’s proposal during the past months and concluded that the complex issues involved engender the need for more work on the proposal. The eleven Member States who will implement the tax, including Germany, France and Italy, said that they are willing to participate in this ongoing process with all E.U. Member States, an are determined to finalize viable solutions by the end of the year that will also take into account the concerns voiced by non-participating Member States.
The Member States envision a harmonized financial transaction tax based on a progressive implementation, which will first focus on the taxation of shares and some, but not all, derivatives. This approach is essential to ensure that each step towards full implementation of the financial transaction tax is designed in a manner that takes due consideration of the economic impact.
Within that context, the first step should be implemented at the latest on January 1, 2016. If individual Member States would like to impose taxation for other products that are not included from the beginning of a progressive implementation, in order to maintain existing taxes, they would be allowed to do so.