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Eversheds comment: EU financial transaction tax faces new hurdles

  • United Kingdom


    A new paper from the EU Council Legal Service suggests that Europe’s plan for an expansive financial transaction tax (FTT) may exceed national jurisdiction, infringe on EU treaties and discriminate against non-participating states. In response to the news, Ben Jones, tax expert at global law firm Eversheds, says:

    “The extra-territorial scope of the proposed Financial Transaction Tax (FTT) has caused significant concern outside the participating EU states. Various elements of the draft FTT provisions could lead to persons or transactions that ostensibly have no real connection to the EU participating states becoming liable to the FTT. This has seemed contrary to long-standing principles of tax sovereignty and specific EU principles regarding discrimination, and it is very interesting that this view now seems to be supported by an EU body.

    The question now is how the block of Member States looking to implement the FTT will react to this legal opinion, especially in light of the challenge to the FTT the UK has raised in the European Court of Justice and the support that challenge has received. It might be that the report of the EU Council Legal Service actually gives the main supporters of the FTT a valuable political escape route to move away from this internationally unpopular tax proposal and either limit the scope of the FTT or scrap it altogether.”

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