Article by Emma Purdy, Steven Baum, Jason Swales and
On October 23, 2012, the European Union (EU) Commission adopted
a proposal for a Council Decision, stating that the EU Member
States in favour of introducing an EU Financial transaction tax
(FTT) may do so through Enhanced Cooperation.
After careful legal analysis, the Commission concluded that all
legal requirements for authorization have now been met and that the
10 participating Member States (i.e., Austria, Belgium, France,
Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain)
should be allowed to move forward.
More specifically, the EU Commission's view is that Enhanced
Cooperation for an FTT will not undermine the internal market or
economic, social and territorial cohesion, nor will it distort
competition or create a barrier to, or discriminate in, trade. This
view is expected to be challenged during the imminent political
If the proposal is adopted by the Council, the 10 participating
Member States will be authorized to establish Enhanced Cooperation
among themselves for a common FTT system by applying the relevant
provisions of the (EU) Treaties. Estonia, mentioned as the eleventh
Member State in favour, apparently has withdrawn at the last
The present proposal for a Council Decision concerns only the
necessary authorization of Enhanced Cooperation for an FTT and is
intended to create an adequate EU legal basis for it. The EU
Commission plans to submit a proposal for specific measures
implementing Enhanced Cooperation (i.e., in substance, for a
Directive on a common FTT system) in due course.
The new proposal's scope and objectives will be based
largely on the original Commission proposal. It remains to be seen
whether this will leave enough room for the EU Commission to
address the significant criticism raised relating to the original
This proposal is an important step towards Enhanced Cooperation
among the 10 Member States. At the next Economic and Financial
Affairs Council (ECOFIN) on November 13, 2012, EU Tax Commissioner,
Algirdas Semeta, is expected to present the Commission's
assessment of the participating Member States' requests, as
well as this draft Council Decision.
The objective is to get authorization from the Council for the
10 Member States to start Enhanced Cooperation by December 2012, as
EU leaders instructed on June 28 to 29, 2012, in their Compact for
Growth and Jobs. Authorization requires an EU-27 qualified majority
vote in the Council (in this case 74% of Member States' votes,
representing 62% of the EU's population), after obtaining the
consent of the European Parliament, which has already been
The likely effective date of the "EU-wide" FTT
is January 1, 2014.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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