The European Commission has indicated that there will be a delay of at least six months before the new harmonised financial transaction tax (FTT) is ready for implementation. The tax on shares, bonds and derivatives was to be introduced on 1 January 2014, although the 11 member states participating in the enhanced cooperation arrangement still have to reach a deal on the FTT.
The delay comes as discussions stalled within the EC-sponsored working group on the details of the new legislation, amid criticism from investment and central bankers, pension and investment funds, and foreign governments.
The EC announced the delay on its website, saying: ‘Once agreed upon at European level, participating member states will have to transpose the [FTT] directive into national legislation. If agreement is found before the end of 2013, and there is a speedy transposition into national law by the participating member states, this common framework for an FTT could still enter into force towards the middle of 2014.’
Richard Asquith, head of tax at TMF Group, commented: ‘This tax has been rushed in design and implementation, so a delay of at least six months would be no surprise. The countries involved will have to listen more closely to the markets and other countries if they are to get this right.’
A number of EU countries introduced their own versions of FTT in the past 10 months. According to TMF, ‘the tax revenues and drop-off in trading have both been disappointing. Hungary’s FTT, launched in 2012, has raised less than 50% of the forecast; France’s version, launched in August 2012, has raised about 50% of anticipated income; and Italy’s FTT, launched on 1 March 2013, has led to a sharp drop-off in Italian share trading.’
Last week, the Economic and Monetary Affairs Committee of the European Parliament maintained its backing of the Commission’s proposal for a wide scope financial transaction tax (FTT) that taxes shares at 0.1% and derivatives at 0.01%.
The European Commission has indicated that there will be a delay of at least six months before the new harmonised financial transaction tax (FTT) is ready for implementation. The tax on shares, bonds and derivatives was to be introduced on 1 January 2014, although the 11 member states participating in the enhanced cooperation arrangement still have to reach a deal on the FTT.
The delay comes as discussions stalled within the EC-sponsored working group on the details of the new legislation, amid criticism from investment and central bankers, pension and investment funds, and foreign governments.
The EC announced the delay on its website, saying: ‘Once agreed upon at European level, participating member states will have to transpose the [FTT] directive into national legislation. If agreement is found before the end of 2013, and there is a speedy transposition into national law by the participating member states, this common framework for an FTT could still enter into force towards the middle of 2014.’
Richard Asquith, head of tax at TMF Group, commented: ‘This tax has been rushed in design and implementation, so a delay of at least six months would be no surprise. The countries involved will have to listen more closely to the markets and other countries if they are to get this right.’
A number of EU countries introduced their own versions of FTT in the past 10 months. According to TMF, ‘the tax revenues and drop-off in trading have both been disappointing. Hungary’s FTT, launched in 2012, has raised less than 50% of the forecast; France’s version, launched in August 2012, has raised about 50% of anticipated income; and Italy’s FTT, launched on 1 March 2013, has led to a sharp drop-off in Italian share trading.’
Last week, the Economic and Monetary Affairs Committee of the European Parliament maintained its backing of the Commission’s proposal for a wide scope financial transaction tax (FTT) that taxes shares at 0.1% and derivatives at 0.01%.
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