The European Union may reduce the rate of tax on financial transactions

09.07.2013

Last week mass media got the information about statement of European Commissioner for Taxation Algirdas Schemeta, under which the European Commission is ready to reduce the rate of tax on financial transactions (FTT). It was initially reported that the rates is going to be reduced from 0.1% to 0.01%. In this case, there would be a sharp reduction of the corresponding revenues from 35 billion euros to just 3.5 billion euros.

However, this information was later denied by Algirdas Schemeta, who explained, that the European Commission is ready to proceed to the consideration of a number of proposals about reducing the rate of tax on financial transactions (FTT), but isn`t ready for the introduction of radical reduction of the tax. Thus, according to the project of European Commission, financial transaction tax would cover most of the financial instruments. Rates of 0.1% will be applied to securities and bonds, the rates at 0.01% - to derivative financial instruments - derivatives.

At the same time, the European Parliament after the issuance of the relevant resolution approving the tax called for a phased introduction of these rates. So, until January 1 of 2017, it is proposed government bonds and pension funds for securities taxed at rates of 0.05%, and the rates of 0.005% will be subject to derivative financial instruments.

Till this moment, there are eleven states which already ready for introduction on their territories tax on financial transactions. These countries are: France, Germany, Belgium, Spain, Portugal, Italy, Austria, Estonia, Greece, Slovakia and Slovenia.

Based on: http://ec.europa.eu/news/

Expert’s opinion

Nobody doubts that financial transaction tax will be forced into application. Too long – more than two years – the proposal is being discussed.

It is quite surprising that development and as it seems stable countries deal with the question of taxation, additional sources of budget replenishment. Germany is a country of preciseness, punctuality and reliability. This country the first one (after the USA) is ready to imprison all its citizens, if they will not report on, will not pay or will open a bank account not in Dutch bank. And exactly the Germany, which still seems to be rich country for Russians, first of all vote for additional tax.

It means that not all as good as it seems. So, the inflation is raising together with unemployment and new sources to replenish the budget are still not found.

Let us see what the outcome of all debates and discussion will b in the end and how this instrument will work in practice. 

Irina Lomakina ( Director of Moscow office of “Honest&Bright” Company)