Financial Transaction Tax proposed by the European Commission
Reference
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On 28 September 2011, the European Commission published a draft directive that would introduce a financial transaction tax (FTT) in all European Union (EU) Member States.
The FTT, as a response to the recent financial crisis, has been designed to cover all transactions in financial instruments between financial institutions.
In order for the conditions of the directive to apply, at least one of the parties to the transaction must be a financial institution established in the EU.
The minimum level of FTT required by the directive would be as follows:
- 0.01% for derivatives agreements; and
- 0.1% for all other financial transactions.
This draft directive requires the unanimous approval of the EU Council to become effective.
We will continue to monitor the progress of the above-mentioned directive for any new developments and will provide more information as it becomes available.