European Union: The "State Of Play" Of The European Financial Transaction Tax: European Council Meeting, 8 December 2015

Last Updated: December 16 2015
Article by Adam Blakemore and Catherine Richardson

Most Read Contributor in United States, September 2017

On 3 December 2015 the Luxembourg President of the Council of the European Union released a "state of play" announcement on the progress made during the course of this year by the ten European Union participating member states (Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain)1 towards the introduction of the European financial transaction tax (the "FTT").

The "state of play" announcement was followed, on 8 December 2015, by a statement at the ECOFIN meeting in Brussels by the ten participating member states setting out their agreement on features that should be present in the final form of the FTT (the "December Statement").

This Client & Friends Alert briefly considers the main features of the December Statement, and contemplates future developments regarding the implementation of the FTT.  In its current form, the proposed FTT would apply to certain transactions in respect of financial instruments (including shares and derivatives) where at least one party is a financial institution, and at least one party is established in a participating member state, or the financial instrument in which the parties are dealing is issued in a participating member state.  The potential breadth of the proposed FTT, notwithstanding only ten participating member states are currently cooperating to introduce the FTT, means that the implementation of the tax would have a potentially significant impact on the European financial sector and a wide group of financial institutions.

December Statement: key features and themes

The December Statement offers the clearest summary to date of how currently outstanding issues regarding the form, scope and extent of the FTT are likely to be resolved.  However, the technical details of the resolution of those issues still remain absent.

Broadly, the December Statement identifies that the form of the FTT to be agreed by the participating member states should have the following features:

  • all share transactions, including intra-day share trading transactions, will fall within the scope of the FTT.  The territorial scope of the FTT for share transactions should follow the European Commission's proposals from February 2013 for taxation to be based on "residence" (determined as being where the place of establishment of the parties to the taxable transaction is located), supplemented by the "issuance principle" (determined as being the location of establishment of the issuer of the shares being used in the transaction).2  The December Statement preserves some flexibility in this contentious area, however, stating that consideration needs to be given to "whether it is more sensible to start taxation with shares issued in the [participating] member states";
  • share transactions in a chain will be subject to the FTT, except for transactions with certain agents and clearing members who act as "facilitators".  Intermediaries would therefore be taxed to the extent that the transaction is carried out as a proprietary trade;
  • a limited market making exemption for share transactions "might be required" in order to "sustain liquidity in illiquid market configurations";
  • derivatives transactions will, as originally proposed by the European Commission in February 2013, fall within the scope of the FTT, and will be taxed based on both the residence and issuance principles.  The December Statement identifies that the imposition of the FTT on derivatives trades "should not impact the cost of sovereign borrowing", a particular concern of several of the participating member states;
  • the December Statement confirms that no exemption for market making regarding derivatives transactions is contemplated; and
  • the determination of the tax base for derivatives will follow certain formulas based on the nature of the derivatives concerned.  Option type derivatives will be taxed on any option premium.   For non-option derivatives (such as contracts for differences), the taxation base suggested in the December Statement is the notional amount or market value of the derivative.  The technical details of how the FTT charges are to be computed remains absent, however, and the December Statement notes that in order to "avoid distortions" adjustments to the tax rate or the definition of the tax base may be necessary.

A number of key themes can also be discerned from the December Statement:

  • major issues remain outstanding regarding the extent and detailed implementation of the FTT.  The December Statement notes that additional time will be required for the participating member states to conclude discussion on several open issues (including the determination of adequate tax rates for different versions of derivatives).  The December Statement appears to contemplate resolution of the remaining outstanding open issues at some point before 30 June 2016;
  • the participating member states have reaffirmed their desire to avoid the negative impacts of the FTT on pension schemes and the provision of non-financial services in the "real economy"; and
  • while reference is made in the December Statement of the need to prevent the FTT having a negative impact on the interests of non-participating member states, there is no detail of any measures to ensure that this objective is achieved.  No reference is made in either the December Statement, or the "state of play" document prepared by the Luxembourg Presidency, of legal challenges under European law to the implementation of the FTT.3


2015 has been an important year for international tax developments.

Significant progress has been made by the OECD under the Base Erosion and Profit Shifting Project, and this is likely to lead to many changes in how cross-border financing and commercial transactions are structured.  Technical discussions regarding the proposals to establish a common consolidated corporate tax base in the European Union continue to be progressed politically.

In this context, the progress of the FTT towards implementation has been less visible and less public.

The December Statement is a timely reminder that although significant technical and macro-economic issues remain before the FTT can be introduced as a workable tax, the political will to achieve this aim remains present in the remaining ten participating member states.

It remains a concern, however, that key technical questions regarding the scope of the FTT (such as whether a resident or issuance principle applies for the determination of which transactions are subject to the tax) still remain almost three years after the Commission's proposals of February 2013.  It also appears likely that other, more political, obstacles to the introduction of the FTT (including the potentially adverse impact on European pension schemes, and the final hypothecation of FTT revenues between participating member states) may continue to contribute to the delay of the implementation of the FTT.


1 Estonia was originally one of the participating member states, but is understood on 8 December 2015 to have declined to participate further in the implementation of the FTT through the enhanced cooperation procedure.

2 A detailed Clients and Friends memorandum regarding the proposed form of the FTT was published on 14 February 2013 and is available here.

3 A Clients and Friends Alert concerning the United Kingdom's filing of an application to annul the European Council Decision (2013/52/EU) authorising the introduction of the FTT through the enhanced cooperation procedure was published on 14 February 2013 is available here.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.