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EU FTT is a “political laboratory”, Moscovici Says

Reaching an agreement on a financial transaction tax (FTT) would serve as a “political and institutional laboratory,” said EU Tax Commissioner Pierre Moscovici, noting it would mark the first tax directive adopted through enhanced cooperation.


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Reaching an agreement on a financial transaction tax (FTT) would serve as a “political and institutional laboratory,” said EU Tax Commissioner Pierre Moscovici, noting it would mark the first tax directive adopted through enhanced cooperation.

Ten member states have been discussing an EU FTT through enhanced cooperation, a vehicle that allows at least nine member states to move forward with a legislative proposal when the 28 member states cannot agree.

“[An agreement on the FTT] can only encourage the commission to give technical and political support. Because if we are not able to overcome unanimity [in the tax area] nor to introduce [a tax provision through] enhanced cooperation, then we will be helpless. There is with this issue an institutional and political laboratory to which I am attached,” Moscovici explained at a June 14 meeting of the Economic and Financial Affairs Council. Earlier this year, the European Commission proposed ways to circumvent the unanimity rule in the tax area.

Moscovici said he hopes for an agreement on the FTT before the end of his mandate in November, recalling that he was one of the first finance ministers, back in 2012, to send a letter asking for the launch of an enhanced cooperation on the proposal after it failed to be adopted by all EU member states.

The 10 finance ministers negotiating an FTT met on the sidelines of the ECOFIN meeting, but only briefly because the Eurogroup meeting was longer than expected. German Finance Minister Olaf Scholz told reporters it was important to still hold the meeting because “a lot of government changed” and it’s a “good message” to stick to what the countries agreed on a few months ago, when France and Germany proposed to relaunch negotiations based on the model of the French FTT.

Scholz told his peers that the atmosphere among the participants was “constructive and cooperative” and that FTT talks are likely to be productive until autumn. “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, adding that in two or three months, the participating member states might come back to their peers to present an agreement.

Speaking for the Romanian presidency of the EU Council, Eugen Orlando Teodorovici, minister of public finance, said that “preparatory deliberation [on the agreement on the FTT] will have to take place in an inclusive manner so interests are safeguarded, including those of countries not participating” in the enhanced cooperation.

As the council recalled in its ECOFIN background brief, “in order to reach a final agreement among the member states participating in the enhanced cooperation, further work in the Council and its preparatory bodies will be required in order to ensure that the competences, rights and obligations of non-participating EU member states are respected.”

During the ECOFIN meeting, no member states, participants or nonparticipants, wished to express themselves on the matter. Discussions have been difficult with nonparticipating member states, which have concerns that the FTT might capture transactions by entities from their territory even if they remain outside the FTT zone. In a note on the state of play transmitted to all EU member states, Germany explains that the FTT will “be levied on the acquisition of shares of listed companies whose head office is in a Member State of the European Union and whose market capitalization exceeds €1 billion.” That means that if, for example, a Total SA share is bought on the New York Stock Exchange, the tax would be levied on the transaction, an official said.

Scholz told reporters he is hoping the FTT will be introduced in 2021.

Another tax talk took place behind closed doors, when the commission debriefed member states on the outcome of the G-20 meeting of finance ministers held in Fukuoka June 8-9, where ministers approved the OECD’s plan to achieve consensus on a new global agreement for taxing multinationals, vowing to step up their efforts to produce a final report by 2020.

According to a source present during that discussion, only Luxembourg’s Pierre Gramegna took the floor to ask the commission to clarify its intentions regarding its willingness to push for a unified EU position to have a stronger voice at the OECD level.

Without a discussion, ECOFIN also decided to remove Dominica from the EU list of noncooperative jurisdictions for tax purposes. “Dominica has implemented its commitments and addressed EU concerns as regards automatic exchange of financial information. More specifically, Dominica completed the necessary steps to sign and ratify the OECD multilateral convention on mutual administrative assistance,” the council said in a press release.

Regarding the adoption of the Code of Conduct Group (Business Taxation) report, Teodorovici said he encouraged the council to make a decision on Switzerland in the context of the EU listing of noncooperative jurisdictions. Switzerland is on the so-called gray list, but a Swiss referendum on May 21 backed the Federal Act on Tax Reform and AHV Financing, which is expected to allow the country to remain an attractive business location while complying with international tax standards. “The EU list exercise is a dynamic process,” Teodorovici said, adding that non-EU countries should be allowed to see themselves “delisted as soon as they have made sufficient progress based on their commitments.”

By Elodie LAMER

Cette information est extraite de notre service d'actualité taxnotes

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