Legal implications of a financial transactions tax : a European Union perspective

Abstract

Chapter One briefly discusses the FTT’s development, the theoretical literature and practical experiences of two EU Member States, Sweden and the United Kingdom, with the taxing of financial transactions. Chapter Two introduces the European Proposals by examining the context and the legal elements of the legislations. The study centres on the FTT’s legal basis, its interaction with the Treaties and the Enhanced Cooperation Procedure. Chapter Three is a technical study of the Redrafted Proposal, focusing on the tax’s scope. The first part of the chapter looks at the various financial instruments and financial transactions that are taxable, due regard given to the exemptions afforded under the legislation. The taxable financial institutions and the excluded entities are also discussed. The second part of the chapter details the territorial scope of the tax, by delving into the establishment principle. Here, illustrations depicting how taxing rights are attributed are provided for a better comprehension of the tax’s chargeability. Throughout the chapter, the Redrafted Proposal is compared and contrasted to the Original Proposal. Issues warranting rectification are also discussed. The final part of the chapter briefly discusses the chargeability and collection of the tax, without delving into the procedural aspects of crossborder tax collection and administrative cooperation between States. Chapter Four challenges the tax; it’s objectives, scope and compliance with the Treaties, in light of the official challenge launched by the UK. This chapter also discusses the extra-territorial effects of the tax on Malta, and other advantages or disadvantages that Malta will enjoy or have to forgo by deciding against joining the FTT-zone.