Wednesday

21st Feb 2024

EU institutions at war on 'illegal' finance tax

  • Back to square one? The FTT has a long history of setbacks (Photo: Alan Cleaver)

A financial transactions tax (FTT) for 11 EU countries would be illegal as it affects the tax sovereignty of others, according to an opinion by the legal service of the EU Council in Brussels.

The European Commission says the tax is in line with EU law, however.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

In the leaked document, seen by Reuters and Financial Times, the lawyers serving EU member states say the proposed financial transactions tax "exceeds member states' jurisdiction for taxation under the norms of international customary law as they are understood by the Union."

The 14-page legal opinion concludes that the proposal is "not compatible" with EU law "as it infringes upon the taxing competences of non-participating member states" and is "discriminatory and likely to lead to distortion of competition."

The EU commission tabled a proposal earlier this year after Austria, Belgium, Estonia, France, Germany, Greece, Slovakia, Slovenia and Spain said they want to go ahead in the absence of a deal among all 28 member states.

"We strongly disagree with the Council legal service's opinion on the FTT," Emer Traynor, spokeswoman for the commissioner in charge of taxation, told this website.

She said the legal opinion only deals with parts of the proposal and that the commission maintains the FTT is "legally sound and fully in line with the EU treaties and international tax law."

The commission's own legal service is now set to "analyse in further detail" the legal opinion of its neighbouring institution.

"We expect the member states not just to take on the Council legal service's views, but to assess them critically against the commission's robust legal analysis of this proposal," Traynor added.

Meanwhile, in Berlin, the finance ministry said Germany is not backing down.

"The German government is pushing for a swift implementation of the FTT. We want the financial sector to share the cost of the financial crisis in an appropriate manner. Nothing has changed on that," Bertrand Benoit, spokesman for finance minister Wolfgang Schaeuble, said.

"Legal concerns have to be clarified as soon as possible and eliminated," he noted.

The FTT, also known as the "Robin Hood" or "Tobin" tax, is designed to skim money from the financial sector and to discourage speculative and high-risk trades.

It has a long history of setbacks and of confusion on how to use the money it generates, whether for humanitarian aid, filling state coffers or as a contribution to the EU budget.

The current proposal aims at making banks pay about €35 billion a year.

Britain, with its large financial sector, is opposing the FTT and has challenged the legality of its provision, which allows, for instance, British banks to be taxed if they trade with French or German banks based in London.

EU commission not giving up on finance tax

The EU Commission has said it is not giving up on a planned financial transactions tax for 11 countries after a legal opinion said it was against Union law.

France's Le Maire 'goes German' with austerity budget

The French government announced €10bn in further spending cuts. However, defence spending is set to increase significantly, up to €413bn from €295bn, while €400m was cut from a fund meant for renovating schools, carpooling infrastructure, and other environmental projects.

France's Le Maire 'goes German' with austerity budget

The French government announced €10bn in further spending cuts. However, defence spending is set to increase significantly, up to €413bn from €295bn, while €400m was cut from a fund meant for renovating schools, carpooling infrastructure, and other environmental projects.

Opinion

The elephant in the room at this weekend's African Union summit

Italy's offer to mobilise €5.5bn over the next years, overwhelmingly in already-allocated loans and guarantees, pales in comparison to the financing challenges faced by Africa. Only an EU-wide coordinated financial offer can credibly respond to African needs.

Latest News

  1. African leaders unveil continent-wide plan to buy medicines
  2. EU urban-rural divide not bridged by cohesion policy, report finds
  3. Impending Rafah disaster shows up politics of humanitarian aid
  4. Sweden heading into Nato, after Orbán-Kristersson deal
  5. EU-Israel trade agreement must be on table to stop Rafah attack
  6. 'Nightmare' 2024 sees Orbán struggle ahead of EU elections
  7. 'Crying wolf' win for chemicals lobby at Antwerp EU meeting
  8. Hungary blocks EU appeal for Israel not to strike Rafah

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us