EC proposes minimum tax on financial transactions in all EU countries from 2014

The European Commission has proposed a tax on financial transactions that would stay at a minimum of 0.1 percent for the trading of bonds and shares and at 0.01 percent for derivative products, which should come into affect from the beginning of 2014, depending on the Council decision. Member states would be free to apply higher rates and the tax would have to be paid by each party to a transaction. It would apply to all financial transactions if at least one party to the transaction were established in an EU member state.

“Belgium, Cyprus, France, Finland, Greece, Ireland, Italy, Romania, Poland and United Kingdom already have a form of financial transaction tax in place. They may have to modify their national rules to align them with the rules proposed by the Commission. This means Member States would have to apply the minimum rate and harmonise the tax base as provided by the EU rules on the financial transaction tax,” according to the European Commission. The Commission has proposed that the tax should cover only transactions where financial institutions are involved. The aim is to tax the financial sector, not their clients. However, in case private households and enterprises were to purchase or sell financial products, financial institutions could pass on the tax. For instance, for a purchase of shares to the value of EUR 10000 the bank could charge EUR 10, which is not excessive, the statement goes on. The EC estimates the tax could raise around EUR 57 billion a year at a rate of 0.1 percent for bonds and shares and 0.01 percent for other kinds of transactions such as derivatives. “The financial sector would make a fair contribution to the cost of the crisis after benefiting from very significant financial support from governments since the beginning of the current crisis,” according to the EC. The proposal initially covers the European Union, but the E plans to propose it enforcement on a worldwide level in the framework of the G20. “With the support of the current French Presidency of the G20, the introduction of a financial transaction tax at global level could be on the table at the next G20 summit in Cannes on 3 and 4 November,” it wrote in a statement. editor@romania-insider.com (photo source: Photoxpress.com)