EU Financial Transactions Tax Agreement Close, Says Scholz
27/01/2020
German Finance Minister Olaf Scholz has said he is confident that an agreement can be reached on a European Union financial transactions tax.
According to a statement issued by the German Finance Ministry following the recent meeting of EU finance ministers, Scholz said that the member states negotiating the terms of the proposed EU FTT are close to reaching a conclusion.
Scholz presented what he described as a final proposal for an EU FTT to the 10 member states participating in the initiative in December 2019. This would impose a tax of 0.2 percent on the purchase of shares in domestically listed companies with a market capitalization in excess of EUR1bn (USD1.1bn). The tax would also apply to depositary receipts issued domestically and abroad and which are backed by shares in these companies. Initial share offerings would be excluded from the FTT.
The German Government says such a tax would apply mostly to institutional investors, as share purchases by private investors represent only about three percent of overall trading volume.
It has been estimated that Germany would collect around EUR1.5bn in additional tax revenue from the FTT as currently proposed, which would be used to help fund the state pension.
The other member states taking part in the negotiations towards an EU FTT are Austria, Belgium, France, Greece, Italy, Portugal, Slovakia, Slovenia, and Spain. These countries are participating in the initiative under the EU's enhanced cooperation mechanism, which allows smaller groups of member states to proceed with EU legislation when unanimity on a proposal cannot be achieved.
As initially proposed by the European Commission in 2011, the FTT was to be imposed on all transactions in financial instruments, with the exchange of shares and bonds taxed at a rate of 0.1 percent and derivative contracts at a rate of 0.01 percent. However, member states failed to reach an agreement on the technical details of the draft directive.
Source: Pride Partners International