France and Germany have proposed a method for the “mutualization” of financial transaction tax (FTT) revenues that would ensure that each of the 10 participating countries would get at least €20 million.
“Countries that are expected to generate little revenue from the FTT will be guaranteed a minimum share of the tax take. This will ensure that smaller countries can cover the fixed costs associated with establishing and maintaining infrastructure for the collection” of the FTT, according to a joint proposal made by France and Germany and seen by Tax Notes. The proposal reportedly was discussed by the 10 countries’ finance ministers on the sidelines of the June 21 meeting of the Economic and Financial Affairs Council. But the short duration of the meeting did not give finance ministers time to discuss any of the open FTT issues in detail. One EU official said the proposal is “quite consensual.”
The proposal says guaranteed minimum revenue should be part of a “broader discussion” about a budgetary instrument specific to the eurozone. During a June 20 meeting, the finance ministers of the 19 eurozone countries decided to set up such an instrument, but decisions regarding its size and financing sources were left for discussion until the end of 2019.
France and Germany want a portion of the FTT to finance a eurozone budgetary instrument. The mutualization system for the FTT revenues should “require a specific intergovernmental agreement,” the proposal says.
The mutualization method “is based on a guaranteed minimum revenue of €20 million,” the proposal says. That amount represents the expected costs of implementing the FTT.
The European Commission expects the FTT to raise €3.44 billion a year. That would mean €33 million for Austria, €151 million for Belgium, €1 billion for France, €1.24 billion for Germany, €10 million for Greece, €478 million for Italy, €33 million for Portugal, and €498 million for Spain, but nothing for Slovakia and Slovenia, because all their costs would be offset by the FTT revenues.
France and Germany propose that countries with expected revenues exceeding €100 million should compensate those with lower projected revenues. In order for Greece, Slovakia, and Slovenia to get the minimum €20 million in FTT revenues per year, their combined €50 million shortfall should be compensated by Belgium, France, Germany, Italy, and Spain, according to the proposal. Each would give a contribution based on its share of gross national income in the “FTT zone”: Belgium would contribute up to €2.5 million a year, France would contribute approximately €12.8 million, Germany would add about €19.07 million, Italy would kick in about €9.14 million, and Spain would contribute about €6.48 million.
During the June 21 ECOFIN meeting, German Finance Minister Olaf Scholz told the 27 other EU member states that he expected an agreement this year. “No one really expected that we would reach an agreement, but we can see on the horizon where we will go and we’re highly likely to get there,” he said.
The discussion on FTT mutualization had been blocked for a few years but gained traction after France and Germany proposed restarting the discussion based on the French FTT, but only targeting shares of companies with a market capitalization above €1 billion.
The finance ministers of the 10 states will meet again on the sidelines of the September 14 or October 10 ECOFIN meeting. The goal is to introduce an FTT in 2021.
By Elodie LAMER
Cette information est extraite de notre service d'actualité taxnotes.