Proposal for a COUNCIL DIRECTIVE on a common system of financial transaction tax and amending Directive 2008/7/EC
Date: 2011-09-28
Institutions: European Commission
Subjects: budget, financial transaction, impact study, tax

EUROPEAN COMMISSION 

Brussels, 28.9.2011 
COM(2011) 594 final 

2011/0261 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

on a common system of financial transaction tax and amending Directive 2008/7/EC 

{SEC(2011) 1102} 
{SEC(2011) 1103} 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

1.1. 

Introduction: Financial and economic crisis context, policy goals and need to ensure 
the proper functioning of the internal market 

The  recent  global  economic  and  financial  crisis  had  a  serious  impact  on  our  economies  and  the 
public finances. The financial sector has played a major role in causing the economic crisis whilst 
governments and European citizens at large have borne the cost. There is a strong consensus within 
Europe and internationally that the financial sector should contribute more fairly given the costs of 
dealing with the crisis and the current under-taxation of the sector. Several EU Member States have 
already taken divergent action in the area of financial sector taxation. The purpose of this proposal 
is to provide a common European approach to this issue that is consistent with the internal market. 
The  present  proposal  aims  at  complementing  the  EU  regulatory  framework  for  safer  financial 
services by addressing particularly risky behaviour in some segments of financial markets so as to 
avoid the repetition of past practices. 

The European Commission already explored the idea of implementing a FTT in its Communication 
of 7 October 2010 on Taxation of the Financial Sector1. In view of the analysis carried out by the 
Commission,  and  also  in  response  to  the  numerous  calls  of  the  European  Council2,  the  European 
Parliament3 and the Council, the present proposal is a first step: 

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to  avoid  fragmentation  in  the  internal  market  for  financial  services,  bearing  in  mind  the 
increasing number of uncoordinated national tax measures being put in place; 

to  ensure  that  financial  institutions  make  a  fair  contribution  to  covering  the  costs  of  the 
recent crisis and to ensure a level playing field with other sectors from a taxation point of 
view4; 

to  create  appropriate  disincentives  for  transactions  that  do  not  enhance  the  efficiency  of 
financial  markets  thereby  complementing  regulatory  measures  aimed  at  avoiding  future 
crises. 

Given the extremely high mobility of most of the transactions to be potentially taxed, it is important 
to avoid distortions caused by tax rules conceived by Member States acting unilaterally. Indeed, a 
fragmentation  of  financial  markets  across  activities  and  across  borders  can  only  be  avoided  and 

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COM(2010) 549 final  
(http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0549:FIN:EN:PDF). 
In particular, at the European Council meeting on 11 March 2011 the heads of state or government of the Euro 
area agreed that “the introduction of a financial transaction tax should be explored and developed further at the 
Euro area, EU and international levels.” The subsequent European Council of 24 and 25 March 2011 reiterated 
its  earlier  conclusion  that  the  introduction  of  a  global  financial  transaction  tax  should  be  explored  and 
developed further. 
On  10  and  25  March  2010  and  8  March  2011  the  European  Parliament  adopted  resolutions  calling  the 
Commission to carry out an impact assessment of a FTT exploring its advantages and drawbacks. Further, it 
asked  to  assess  the  potential  of  FTT  options  to  contribute  to  the  EU  budget  and  to  be  used  as  innovative 
financing  mechanisms  to  provide  support  for  adaptation  to  and  mitigation  of  climate  change  for  developing 
countries, as well as for financing development cooperation. 
Most financial and insurance services are exempted from VAT. 

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equal  treatment  of  financial  institutions  in  the  EU  and,  ultimately,  the  proper  functioning  of  the 
internal market, can only be ensured through action at EU level.  

This  proposal  therefore  provides  for  harmonisation  of  Member  States’  taxes  on  financial 
transactions to ensure the smooth functioning of the single market.  

In line with the Commission Proposal for a Council Decision on the system of own resources of the 
European Union of 29 June 20115, this proposal also aims at creating a new revenue stream with the 
objective to gradually displace national contributions to the EU budget, leaving a lesser burden on 
national treasuries. 

1.2. 

The financing of the EU Budget  

The issue of financial sector taxation was also part of the Commission Communication on the EU 
Budget  Review  of  19  October  20106  which  states  that  “The  Commission  considers  that  the 
following non-exclusive list of financing means could be possible candidates for own resources to 
gradually  displace  national  contributions,  leaving  a  lesser  burden  on  national  treasuries:  -  EU 
taxation of the financial sector.” The subsequent Proposal for a Council Decision on the system of 
own resources of the European Union of 29 June 20117 identified a FTT as a new own resource to 
be entered in the budget of the EU. Consequently, this proposal will be complemented by separate 
own  resource  proposals  setting  out  how  the  Commission  proposes  that  the  FTT  will  serve  as  a 
source for the EU budget. 

1.3. 

Regulatory context 

The European Union is in the midst of an ambitious regulatory reform programme in the financial 
services  sector.  Before  the  end  of  this  year  the  Commission  will  have  proposed  all  the  main 
necessary  elements  for  a  fundamental  improvement  of  the  way  Europe's  financial  markets  are 
regulated  and  supervised.  The  EU  financial  services  reform  is  oriented  around  four  strategic 
objectives,  namely  improving  the  supervision  of  the  financial  sector;  strengthening  financial 
institutions,  and  providing  a  framework  for  their  recovery  where  necessary;  making  financial 
markets  safer  and  more  transparent;  and  increasing  the  protection  of  consumers  of  financial 
services. It is expected that this wide-reaching reform will bring back the financial services sector at 
the service of the real economy, in particular to finance growth. The FTT proposal is intended to 
complement these regulatory reforms. 

1.4 

International context 

The present proposal also substantially contributes to the ongoing international debate on financial 
sector  taxation  and  in  particular  to  the  development  of  a  FTT  at  global  level.  In  order  to  best 
minimise risks, a coordinated approach at international level is the best option. The present proposal 
demonstrates  how  an  effective  FTT  can  be  designed  and  implemented,  generating  significant 
revenue.  This  should  pave  the  way  towards  a  coordinated  approach  with  the  most  relevant 
international partners.  

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COM(2011) 510 final. 
http://ec.europa.eu/budget/library/biblio/documents/fin_fwk1420/proposal_council_own_resources_en.pdf  
COM(2010) 700 final 
(http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0700:FIN:EN:PDF). 
COM(2011) 510 final 
(http://ec.europa.eu/budget/library/biblio/documents/fin_fwk1420/proposal_council_own_resources_en.pdf). 

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2. 

RESULTS  OF  CONSULTATIONS  WITH  THE  INTERESTED  PARTIES  AND 
IMPACT ASSESSMENTS 

2.1. 

External consultation and expertise 

The  present  proposal  has  been  formulated  against  the  background  of  a  wide  range  of  external 
contributions.  These  contributions  took  the  form  of  feedback  received  in  the  course  of  a  public 
consultation on financial sector taxation, targeted consultations with the Member States, experts and 
the  financial  sector  stakeholders,  as  well  as  three  different  external  studies  commissioned  for  the 
purpose of the impact assessment. 

The results of the consultation process and the external input are reflected in the impact assessment. 

2.2. 

Impact assessment 

The impact assessment accompanying the present proposal analyses the impacts of additional taxes 
on the financial sector with regard to the objectives of (1) ensuring a contribution of the financial 
sector  to  public  finances,  (2)  limiting  the  undesirable  market  behaviour  and  thereby  stabilising 
markets  and  (3)  avoiding  distortions  on  the  internal  market.  The  impact  assessment  analysed  two 
basic options: a financial transaction tax (FTT) and a financial activities tax (FAT), as well as the 
numerous design options related to them, and concluded that an FTT was the preferred option. 

The FTT appears to have the potential for raising significant tax revenues from the financial sector, 
but, like the FAT, it also risks some negative effects in terms of GDP and reduction in the market 
volume of transactions. In order to avoid risks of delocalisation a co-ordinated approach is needed 
both at EU level to avoid fragmentation of the Single Market and at international level, in line with 
the ambitions for G-20 co-operation.  

Furthermore, in order to respond to the risks in terms of market reaction and impact on growth, the 
design of the FTT contains specific mitigating design features with respect to the economic effects 
and incidence of the tax, possible avoidance strategies and relocation risks: 

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a broadly defined tax scope as regards products, transactions, types of trade and financial 
actors as well as transactions carried out inside a financial group; 

the  use  of  the  residence  principle  –  taxation  in  a  Member  State  of  establishment  of 
financial  actors,  independent  from  the  location  of  the  transactions.  The  directive  also 
provides for the taxation in the EU, in case a non-EU financial institution is involved in a 
financial transaction with a party in the EU, and in case one of its branches in the EU is 
involved in a financial transaction; 

the setting of tax rates at an appropriate level to minimise eventual impacts on the cost of 
capital for non-financial investment purposes; 

the  exclusion  from  the  scope  of  the  FTT  of  transactions  on  primary  markets  both  for 
securities  (shares, bonds) – so as not to undermine the raising of capital by governments 
and companies – and for currencies. This exclusion of primary markets is consistent with a 
longstanding EU policy practice as also enshrined in Directive 2008/7/EC; 

ring-fencing  of  the  lending  and  borrowing  activities  of  private  households,  enterprises  or 
financial institutions, and other day-to-day financial activities, such as mortgage lending or 
payment transactions; 

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• 

the exclusion of financial transactions for example with the European Central Bank (ECB) 
and with national central banks, from the scope of the FTT, so that the directive will not 
affect the refinancing possibilities of financial institutions or the instruments of monetary 
policy. 

Taking  into  account  the  mitigating  measures  provided  by  the  design  features  of  the  FTT  actually 
proposed, the negative impact on the GDP level in the long run is expected to be limited to around 
0.5% as compared to the baseline scenario.  

The  impact  assessment  shows  that  the  FTT  will  impact  market  behaviour  and  business  models 
within  the  financial  sector.  Automated  Trading  in  financial  markets  could  be  affected  by  a  tax-
induced  increase  in  transaction  costs,  so  that  these  costs  would  erode  the  marginal  profit.  This 
would especially hold for the business model of high-frequency trading physically closely linked to 
the  trading  platforms  on  which  financial  institutions  undertake  numerous  high-volume  but  low-
margin transactions. These might have to be replaced by algorithms that trigger less numerous but 
higher-margin transactions (before the tax). 

The  impact  assessment  also  shows  that  a  FTT  will  have  progressive  distributional  effects,  i.e.  its 
impact will increase proportionately with income, as higher income groups benefit more from the 
services  provided  by  the  financial  sector.  This  holds  especially  for  a  FTT  limited  to  transactions 
with financial instruments such as bonds and shares and derivatives thereof. Private households and 
SMEs not actively investing in financial markets would hardly be affected by this proposal thanks 
to the ring-fencing features built in the design of the FTT. 

The geographical distribution of the tax revenue depends on the technical design of the tax. Under 
this  Directive  the  geographical  spread  will  depend  on  the  place  of  establishment  of  the  financial 
institutions involved in financial transactions and not on the place of trade of financial instruments. 
This is likely to result in a lower degree of concentration of the tax revenue, especially for situations 
where  financial  institutions  intervene  on  a  trading  platform  on  behalf  of  financial  institutions 
established in another Member State. 

The  directive  also  ensures  that  specific  measures  to  address  avoidance,  evasion  and  abuse  are 
defined at the level of the Member States and of the Union through delegated acts. A review clause 
will  allow,  after  three  years  of  implementation,  to  examine  the  impact  of  the  FTT  on  the  proper 
functioning of the internal market, the financial markets and the real economy, taking into account 
the progress on taxation of the financial sector in the international context. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

3.1. 

Legal basis 

The  pertinent  legal  basis  for  the  proposed  Directive  is  Article  113  TFEU.  The  proposal  aims  at 
harmonising  legislation  concerning  indirect  taxation  on  financial  transactions,  which  is  needed  to 
ensure the proper functioning of the internal market and to avoid distortion of competition.  

3.2. 

Subsidiarity and proportionality 

A  uniform  definition  at  EU  level  of  the  essential  features  of  a  FTT  is  necessary  to  avoid  undue 
relocations of transactions and market participants and substitution of financial instruments within 
the  EU.  In  other  words,  a  uniform  definition  at  EU  level  is  necessary  to  ensure  the  proper 
functioning of the internal market and avoid distortions of competition within the EU.  

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By  the  same  token,  a  uniform  definition  at  EU  level  could  play  a  crucial  role  in  reducing  the 
existing fragmentation of the Internal Market, including for the different products of the financial 
sector  that  often  serve  as  close  substitutes.  Non  harmonisation  of  FTT  leads  to  tax  arbitrage  and 
potential double or non taxation. This not only prevents financial transactions to be carried out on a 
level  playing  field,  but  also  affects  revenues  of  Member  States.  Furthermore,  it  imposes  extra 
compliance costs on the financial sector arising from too different tax regimes.  

This is supported by empiric evidence. National taxes on financial transactions so far either resulted 
in delocalisation of activities and/or institutions or were, so as to avoid this, designed in a way that 
they  were  levied  on  relatively  immobile  tax  bases  only,  leaving  close  substitutes  often  untaxed. 
Harmonisation  of  key  concepts  and  coordination  of  implementation  at  EU  level  are  thus  a 
prerequisite  for  an  application  of  financial  transaction  taxes  to  be  successful  and  to  avoid 
distortions. Such EU action will also foster the desirable approach. 

The  present  proposal  thus  concentrates  on  setting  a  common  structure  of  the  tax  and  common 
provisions  on  chargeability.  The  proposal  thus  leaves  a  sufficient  margin  of  manoeuvre  for  the 
Member  States  when  it  comes  to  the  actual  setting  of  the  tax  rates  above  the  minimum  and  the 
specification  of  accounting  and  reporting  obligations  as  well  as  prevention  of  evasion,  avoidance 
and abuse. 

A common framework for an FTT in the EU therefore respects the subsidiarity and proportionality 
principle a set in Article 5 TEU. The objective of this Proposal cannot be sufficiently achieved by 
the Member States and can therefore, by reason of ensuring the proper functioning of the internal 
market, be better achieved at Union level. 

The harmonisation proposed, in form of a Directive rather than a Regulation, does not go beyond 
what  is  necessary  in  order  to  achieve  the  objectives  pursued,  first  and  foremost  for  the  proper 
functioning of the internal market. It thus complies with the principle of proportionality. 

3.3. 

Detailed explanation of the proposal 

3.3.1.  Chapter I (Subject matter, scope and definitions) 

This  chapter  defines  the  essential  framework  of  the  proposed  FTT  in  the  EU.  This  FTT  aims  at 
taxing gross transactions before any netting off. 

The  scope  of  the  tax  is  wide,  because  it  aims  at  covering  transactions  relating  to  all  types  of 
financial  instruments  as  they  are  often  close  substitutes  for  each  other.  Thus,  the  scope  covers 
instruments  which  are  negotiable  on  the  capital  market,  money-market  instruments  (with  the 
exception of instruments of payment), units or shares in collective investment undertakings (which 
include  UCITS  and  alternative  investment  funds8)  and  derivatives  agreements.  Furthermore,  the 
scope of the tax is not limited to trade in organised markets, such as regulated markets, multilateral 

8 

Reference  is  made  to  the  definition  of  financial  instruments  in  Annex  I  to  Directive  2004/39/EC  of  the 
European  Parliament  and  of  the  Council  of  21  April  2004  on  markets  in  financial  instruments  amending 
Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of 
the  Council  and  repealing  Council  Directive  93/22/EEC  (OJ  L  145,  30.4.2004,  p.  1).  This  definition  covers 
units  in  collective  investment  undertakings.  Consequently,  shares  and  units  of  undertakings  for  collective 
investment in transferable securities (UCITS) as defined in Article 1(2) of Directive 2009/65/EC (OJ L 302, 
17.11.2009,  p.  32)  and  alternative  investment  funds  (AIF)  as  defined  in  Article  4(1)(a)  of  Directive 
2011/61/EU  (OJ  L  174,  1.7.2011,  p.  1)  are  financial  instruments.  The  subscription  and  redemption  of  these 
instruments are thus considered financial transactions within the meaning of the present proposal. 

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trading facilities, but also covers other types of trades including over-the-counter trade. It is also not 
limited  to  the  transfer  of  ownership  but  rather  represents  the  obligation  entered  into,  mirroring 
whether  or  not  the  financial  institution  involved  assumes  the  risk  implied  by  a  given  financial 
instrument  ("purchase  and  sale").  Also,  where  a  derivatives  agreement  results  in  a  supply  of 
financial  instruments,  in  addition  to  the  taxable  derivatives  agreement  the  financial  instruments 
supply is also subject to tax, provided that all other conditions for taxation are fulfilled.  

Transactions  with  the  European  Central  Bank  and  national  central  banks  are  however  excluded 
from  the  scope  so  as  to  avoid  any  negative  impact  on  the  refinancing  possibilities  of  financial 
institutions or on monetary policies in general.  

In particular, for both the financial instruments whose purchase, sale and transfer is taxed and for 
the conclusion or modification of derivatives agreements, the relevant regulatory framework at EU 
level provides a clear, comprehensive and accepted set of definitions9. As regards more particularly 
the  derivative  agreements  thus  referred  to,  these  concern  derivatives  for  investment  purposes.  It 
emerges  from  the  definitions  used  that  spot  currency  transactions  are  not  taxable  financial 
transactions, while currency derivative agreements are. Derivative contracts relating to commodities 
are also covered, while physical commodity transactions are not. 

Financial  transactions  can  also  consist  of  the  purchase/sale  or  transfer  of  structured  products, 
meaning tradable securities or other financial instruments offered by way of a securitisation. Such 
products are comparable to any other financial instrument and thus need to be covered by the term 
financial instrument as used in this proposal. Excluding them from the scope of FTT would open 
avoidance opportunities. This category of products notably includes notes, warrants and certificates 
as well as banking securitisations which usually transfer the credit risk associated with assets such 
as  mortgages  or  loans  into  the  market,  as  well  as  insurance  securitisations,  which  involve  the 
transfers of other types of risk, for example underwriting.  

However,  the  scope  of  the  tax  is  focused  on  financial  transactions  carried  out  by  financial 
institutions acting as party to a financial transaction, either for their own account or for the account 
of other persons, or acting in the name of a party to the transaction. This approach ensures that FTT 
is  comprehensively  applied.  In  practical  terms  this  is  usually  evident  via  respective  entries  in  the 
books.  

The definition of financial institutions is broad and essentially includes investment firms, organised 
markets,  credit  institutions,  insurance  and  reinsurance  undertakings,  collective  investment 
undertakings and their managers, pension funds and their managers, holding companies, financial 
leasing companies, special purpose entities, and where possible refers to the definitions provided by 
the relevant EU legislation adopted for regulatory purposes. Additionally other persons carrying out 
certain financial activities on a significant basis should be considered as financial institutions. 

The proposed Directive provides for delegated powers as regards further details. 

Central  Counterparties  (CCPs),  Central  Securities  Depositories  (CSDs)  and  International  Central 
Securities  Depositories  (ICSDs)  are  not  considered  financial  institutions  in  as  much  as  these  are 
exercising functions which are not considered to be trading activity in itself. They are also key for a 
more efficient and more transparent functioning of financial markets. 

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Notably Directive 2004/39/EC (cf. previous footnote). 

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The territorial application of the proposed FTT and the Member States’ taxing rights are defined on 
the basis of the residence principle. In order for a financial transaction to be taxable in the EU, one 
of the parties to the transaction needs to be established in the territory of a Member State. Taxation 
will  take  place  in  the  Member  State  in  the  territory  of  which  the  establishment  of  a  financial 
institution is located, on condition that this institution is party to the transaction, acting either for its 
own  account  or  for  the  account  of  another  person,  or  is  acting  in  the  name  of  party  to  the 
transaction.  

In case these establishments of the different financial institutions, parties to the transaction or acting 
in the name of such parties, are located in the territory of different Member States these different 
Member  States  will  be  competent  to  subject  the  transaction  to  tax  at  the  rates  they  have  set  in 
accordance with this proposal. Where the establishments concerned are located in the territory of a 
State which is not part of the Union the transaction is not subject to FTT in the EU, unless one of 
the  parties  to  transaction  is  established  in  the  EU  in  which  case  the  third-country  financial 
institution will also be deemed to be established and the transaction becomes taxable in the Member 
State  concerned.  Where  transactions  are  carried  out  on  trade  venues  outside  the  EU,  they  will  be 
subject to tax if at least one of the establishments carrying out or intervening in the transaction is 
located in the EU.  

However, in case the person liable to pay the tax was able to prove that there is no link between the 
economic  substance  of  the  transaction  and  the  territory  of  any  Member  State,  the  financial 
institution may not be considered established within a Member State.  

Furthermore, where financial instruments whose purchase and sale is taxable form the object of a 
transfer  between  entities  of  a  group,  this  transfer  shall  be  taxable  even  though  it  might  not  be  a 
purchase or sale.  

It  follows  from  the  foregoing  that  many  financial  activities  are  not  considered  to  be  financial 
transactions in the logic of the FTT which follows the above-mentioned objectives. Further to the 
exclusion  of  primary  markets  explained  above  most  day-to-day  financial  activities  relevant  for 
citizens  and  businesses  remain  outside  the  scope  of  FTT.  This  is  the  case  for  the  conclusion  of 
insurance  contracts,  mortgage  lending,  consumer  credits,  payment  services  etc.  (though  the 
subsequent trading of these via structured products is included). Also, currency transactions on spot 
markets  are  outside  the  scope  FTT,  which  preserves  the  free  movement  of  capital.  However, 
derivatives  agreements  based  on  currency  transactions  are  covered  by  FTT  since  they  are  not  as 
such currency transactions. 

3.3.2.  Chapter II (chargeability, taxable amount and rates) 

The  moment  of  chargeability  is  defined  as  the  moment  when  the  financial  transaction  occurs. 
Subsequent cancellation cannot be considered as a reason to exclude chargeability of the tax, except 
in cases of errors.  

As the purchase/sale or transfer of certain financial instruments (excluding derivatives), on the one 
hand, and the purchase/sale, transfer, conclusion or modification of derivatives agreements, on the 
other  hand,  have  a  different  nature  and  characteristics,  they  have  to  be  associated  to  different 
taxable amounts.  

For the purchase and sale of certain financial instruments (other than derivatives), usually a price or 
any other form of consideration will be determined. Logically, this is to be defined as the taxable 
amount. However, to avoid market distortions special rules are necessary where the consideration is 
lower than the market price or for transactions taking place between entities of a group and which 

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are not covered by the notions of "purchase" and "sale". In these cases the taxable amount is to be 
the market price determined at arm's length at the time FTT becomes chargeable.  

For  the  purchase/sale,  transfer,  conclusion  and  modification  of  derivative  agreements  the  taxable 
amount  of  the  FTT  shall  be  the  notional  amount  at  the  time  the  derivative  agreement  is 
transferred,  concluded  or  modified.  This  approach  would  allow  for  a 
purchased/sold, 
straightforward  and  easy  application  of  FTT  on  derivative  agreements  while  ensuring  low 
compliance  and  administrative  costs.  Also,  this  approach  makes  it  more  difficult  to  artificially 
reduce the tax burden through creative contract design for the derivative agreement as there would 
be no tax incentive for example to enter into an agreement on differences in prices or values only. 
Furthermore  it  implies  the  taxation  at  the  moment  of  the  purchase/sale,  transfer,  conclusion  or 
modification of the contract as compared to taxing cash-flows at different moments in time during 
the life cycle of the agreement. The rate to be used in this case will need to be rather low in order to 
define an adequate tax burden. 

Special provisions might be necessary in the Member States in order to prevent avoidance, evasion 
and  abuse  of  the  tax  (see  also  section  3.3.3).  For  example  in  cases  where  the  notional  amount  is 
artificially  divided:  the  notional  amount  of  a  swap  could  for  instance  be  divided  by  an  arbitrarily 
large factor and all payments be multiplied by the same factor. This would leave the cash flows of 
the instrument unchanged but arbitrarily shrink the size of the tax base. 

Special provisions are necessary to determine the taxable amount in respect of transactions where 
the taxable amount or parts thereof are expressed in another currency than that of Member State of 
assessment. 

The  purchase/sale  or  transfer  of  certain  financial  instruments  other  than  derivatives,  on  the  one 
hand, and purchase/sale, transfer, conclusion or modification of derivatives agreements, on the other 
hand,  are  different  in  nature.  Moreover,  markets  are  likely  to  react  differently  to  a  financial 
transaction tax applied to each of these two categories. For these reasons, and in order to ensure a 
broadly even taxation, the rates should be differentiated as between the two categories. 

The rates should also take into account differences in the applicable methods for the determination 
of the taxable amounts.  

Generally speaking, the minimum tax rates (above which there is room of manoeuvre for national 
policies) are proposed to be set at a level sufficiently high for the harmonisation objective of this 
Directive  to  be  achieved.  At  the  same  time,  the  proposed  rates  are  situated  low  enough  so  that 
delocalisation risks are minimised.  

3.3.3.  Chapter  III  (Payment  of  FTT,  related  obligations  and  prevention  of  evasion,  avoidance 

and abuse) 

This proposal defines the scope of FTT by reference to financial transactions to which a financial 
institution established in the territory of the Member State concerned is party (acting either for its 
own account or for the account of another person) or transactions where the institution acts in the 
name of a party. In fact, financial institutions execute the bulk of transactions on financial markets, 
and the FTT should concentrate on the financial sector as such rather than on citizens. Therefore, 
these  institutions  should  be  liable  to  pay  the  tax  to  the  tax  authorities.  However,  Member  States 
should have the possibility to hold other persons jointly and severally liable for payment of the tax, 
including in cases where a party to a transaction has its headquarters located outside the European 
Union. 

EN 

9 

   EN 

Many financial transactions are carried out by electronic means. In these cases, FTT should be due 
immediately  at  the  moment  of  chargeability.  In  other  cases,  FTT  should  be  due  within  a  period 
which, while being sufficiently long so as to allow for the manual processing of the payment, avoids 
that  unjustifiable  cash-flow  advantages  accrue  to  the  financial  institution  concerned.  A  period  of 
three working days can be considered appropriate in this sense. 

Member States should be obliged to take appropriate measures for FTT to be levied accurately and 
timely and to prevent evasion, avoidance and abuse.  

In  this  context,  Member  States  should  use  existing  and  forthcoming  EU  legislation  on  financial 
markets  that  includes  reporting  and  data  maintenance  obligations  with  respect  to  financial 
transactions. 

Wherever necessary,  they  should  equally use the available administrative cooperation  instruments 
relating to the assessment and recovery of taxes, in particular Directive 2011/16/EU of the Council 
of  15  February  on  administrative  cooperation  in  the  field  of  taxation  and  repealing  Directive 
77/799/EEC10 (applicable as of 1 January 2013), Directive 2010/24/EC of the Council of 16 March 
2010  concerning  mutual  assistance  for  the  recovery  of  claims  relating  to  taxes,  duties  and  other 
measures11 (applicable as of 1 January 2012). Other instruments should also be resorted to where 
relevant  and  applicable,  for  example  the  OECD  -  Council  of  Europe  Multilateral  Convention  on 
Mutual Administrative Assistance in Tax Matters12. 

The proposed Directive provides for delegated powers as regards further details. 

Together  with  the  conceptual  approach  underlying  the  FTT  (broad  scope,  residence  principle,  no 
exemptions), the rules outlined above allow to minimise tax evasion, avoidance and abuse.  

3.3.4.  Chapter IV (Final provisions) 

It  follows  from  the  harmonisation  objective  of  this  proposal  that  Member  States  should  not  be 
allowed  to  maintain  or  introduce  taxes  on  financial  transactions  other  than  the  FTT  object  of  the 
proposed Directive or VAT. Indeed, as far as VAT is concerned, the right of option tax as provided 
for  in  Article  137.1.(a)  of  Council  Directive 2006/112/EC  of  28  November  2006  on  the  common 
system of value added tax13 should continue to apply. Other taxes like those on insurance premiums 
etc. have of course a different nature, as have registration fees on financial transactions, in case they 
represent a genuine re-imbursement of costs or consideration for a service rendered. Such taxes and 
fees are thus not affected by this proposal. 

The provisions of Council Directive 2008/7/EC of 12 February 2008 concerning indirect taxes on 
the raising of capital14 continue to be in principle fully applicable. This entails for instance that the 
primary issue – as mentioned in Article 5(2) of Directive 2008/7/EC – of shares or other securities 
of the same type, or of certificates representing such securities, debentures – including government 
bonds – or other negotiable securities relating to loans is not subject to FTT in the EU. In order to 

10 
11 
12

13 
14 

EN 

OJ L 64, 11.3.2011, p. 1. 
OJ L 84, 31.3.2010, p. 1. 

http://www.oecdilibrary.org/docserver/download/fulltext/2311331e.pdf?expires=1309623132&id=id

&accname=ocid194935&checksum=37A9732331E7939B3EE154BB7EC53C41  
OJ L 347, 11.12.2006, p. 1. 
OJ L 46, 21.2.2008, p. 11. 

10 

   EN 

                                                 
 
avoid  any  potential  conflict  between  the  two  Directives,  it  should  however  be  provided  that  the 
Directive proposed here has precedence over the provisions of Directive 2008/7/EC.  

4. 

BUDGETARY IMPLICATION  

Preliminary estimates indicate that, depending on market reactions, the revenues of the tax could be 
57 EUR billion on a yearly basis in the whole EU. 

The  proposal  would  create  essentially  a  new  revenue  stream  for  the  Member  States  and  the  EU 
budget  –  in  line  with  the  Proposal  for  a  Council  Decision  on  the  system  of  own  resources  of  the 
European Union of 29 June 2011.  

The revenue arising from the FTT in the EU can be wholly or partly used as own resource for the 
EU  Budget  replacing  certain  existing  own  resources  paid  out  of  national  budgets,  which  would 
contribute to budgetary consolidation efforts in the Member States. The Commission will separately 
present the necessary complementary proposals setting out how the FTT could be used as a source 
for the EU budget. 

EN 

11 

   EN 

2011/0261 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

on a common system of financial transaction tax and amending Directive 2008/7/EC 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 113 
thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national Parliaments, 

Having regard to the opinion of the European Parliament15,  

Having regard to the opinion of the European Economic and Social Committee16,  

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

The recent financial crisis has led to debates at all levels about a possible additional tax on 
the  financial  sector  and  in  particular  a  financial  transactions  tax  (FTT).  This  debate  stems 
from  the  desire  to  ensure  the  financial  sector  contribute  to  covering  the  costs  of  the  crisis 
and  that  it  is  taxed  in  a  fair  way  vis-à-vis  other  sectors  for  the  future;  to  dis-incentivise 
excessively  risky  activities  by  financial  institutions;  to  complement  regulatory  measures 
aimed  at  avoiding  future  crises  and  to  generate  additional  revenue  for  general  budgets  or 
specific policy purposes. 

In  order  to  prevent  distortions  through  measures  taken  unilaterally  by  Member  States, 
bearing in mind the extremely high mobility of most of the relevant financial transactions, 
and thus to ensure the proper functioning of the internal market, it is important that the basic 
features  of  a  FTT  in  the  Member  States  are  harmonised  at  Union  level.  Incentives  for  tax 
arbitrage in the Union and allocation distortions between financial markets in the Union, as 
well as possibilities for double or non taxation should thereby be avoided. 

For the internal market to function properly, FTT should apply to trade in a wide range of 
financial  instruments,  including  structured  products,  both  in  the  organised  markets  and 
"over-the-counter", as well as to the conclusion and modification of all derivative contracts. 
For the same reason, it should apply to a broadly determined range of financial institutions. 

15 
16 

OJ C …, …, p.. . 
OJ C …, …, p. .. 

EN 

12 

   EN 

                                                 
(4) 

(5) 

(6) 

85/611/EEC 

and 93/6/EEC 

amending  Council  Directives 

The  definition  of  financial  instruments  in  Annex  I  to  the  Directive  2004/39/EC  of  the 
European  Parliament  and  of  the  Council  of  21  April  2004  on  markets  in  financial 
instruments 
and 
Directive 2000/12/EC of the European Parliament and of the Council and repealing Council 
Directive  93/22/EEC  (MiFID)17  covers  units  in  collective  investment  undertakings.  This 
implies  that  shares  and  units  of  undertakings  for  collective  investment  in  transferable 
securities  (UCITS)  as  defined  in  Article  1(2)  of  Directive  2009/65/EC  of  the  European 
Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and 
administrative  provisions  relating  to  undertakings  for  collective  investment  in  transferable 
securities (UCITS)18 and alternative investment funds (AIF) as defined in Article 4(1)(a) of 
Directive  2011/61/EU  of  the  European  Parliament  and  of  the  Council  of  8 June  2011  on 
Alternative  Investment  Fund  Managers  and  amending  Directives  2003/41/EC  and 
2009/65/EC  and  Regulations  (EC)  No 1060/2009  and  (EU)  No 1095/201019  are  financial 
instruments.  Therefore,  the  subscription  and  redemption  of  these  instruments  are 
transactions that should be subject to the FTT. 

In  order  to  preserve  the  efficient  and  transparent  functioning  of  financial  markets,  it  is 
necessary to exclude certain entities from the personal scope of this Directive, in as much as 
these  are  exercising  functions  which  are  not  considered  to  be  trading  activity  in  itself  but 
rather  facilitating  trade,  or  as  they  enter  into  financial  transactions  in  order  to  financially 
assist Member States.  

Transactions  with  national  central  banks,  just  as  those  with  the  European  Central  Bank 
should  not  be  subject  to  FTT  so  as  to  avoid  any  negative  impact  on  the  refinancing 
possibilities of financial institutions or on monetary policies in general. 

(7)  With the exception of the conclusion or modification of derivative contracts, most trade on 
primary markets and transactions relevant for citizens and businesses such as conclusion of 
insurance  contracts,  mortgage  lending,  consumer  credits  or  payment  services  should  be 
excluded from the scope of FTT, so as not to undermine the raising of capital by companies 
and governments and to avoid impact on households.  

(8) 

(9) 

(10) 

Chargeability  and  taxable  amount  should  be  harmonised  so  as  to  avoid  distortions  in  the 
internal market. 

The  moment  of  chargeability  should  not  be  unduly  delayed  and  should  coincide  with  the 
moment where the financial transaction occurs.  

In order to allow for the taxable amount to be determined as easily as possible so as to limit 
costs  for  businesses  and  for  tax  administrations,  in  the  case  of  financial  transactions  other 
than  those  related  to  derivatives  agreements  reference  should  be  made  normally  to  the 
consideration granted in the context of the transaction. Where no consideration is granted or 
where the consideration granted is lower than the market price, the latter should be referred 
to  as  a  fair  reflection  of  the  value  of  the  transaction.  Equally  for  reasons  of  ease  of 
calculation,  the  notional  amount  should  be  used  where  derivatives  agreements  are 
purchased/sold, transferred, concluded or modified.  

17 
18 
19 

OJ L 145, 30.4.2004, p. 1–44. 
OJ L 302, 17.11.2009, p. 32–96. 
OJ L 174, 1.7.2011, p. 1–73. 

EN 

13 

   EN 

                                                 
(11) 

(12) 

In  the  interest  of  equal  treatment,  a  single  tax  rate  should  apply  within  each  category  of 
transactions, namely trade in financial instruments other than derivatives, on the one hand, 
and the purchase/sale, transfer, conclusion and modification of derivatives agreements. 

In order to concentrate the taxation on the financial sector as such rather than on citizens and 
because financial institutions execute the vast majority of transactions on financial markets, 
the tax should apply to those institutions, whether they trade in their own name, in the name 
of other persons, for their on own account or for the account of other persons.  

(13)  Because  of  the  high  mobility  of  financial  transactions  and  in  order  to  help  mitigating 

potential tax avoidance, the FTT should be applied on the basis of the residence principle. 

(14)  The  minimum  tax  rates  should  be  set  at  a  level  sufficiently  high  for  the  harmonisation 
objective of this Directive to be achieved. At the same time, they have to be low enough so 
that delocalisation risks are minimised. 

(15) 

(16) 

In order for the FTT to be levied in an accurate and timely manner, Member States should 
be  obliged  to  take  the  necessary  measures.  In  order  to  render  the  prevention  of  evasion, 
avoidance and abuse efficient,  Member should be obliged to resort to existing instruments 
on  mutual  assistance  in  fiscal  matters,  wherever  necessary,  and  to  take  advantage  of 
reporting and data maintenance obligations incumbent upon the financial sector according to 
the pertinent legislation. 

In  order  to  allow  the  adoption  of  more  detailed  rules  for  determining  whether  certain 
financial  activities  constitute  a  significant  part  of  an  undertaking's  activity,  so  that  the 
undertaking  can  be  considered  a  financial  institution  for  the  purposes  of  this  Directive,  as 
well as more detailed rules  regarding protection  against tax evasion, avoidance and abuse, 
the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of 
the  European  Union  should  be  delegated  to  the  Commission  in  respect  of  specifying  the 
measures necessary to this effect. It is of particular importance that the Commission carries 
out  appropriate  consultations  during  its  preparatory  work,  including  at  expert  level.  The 
Commission,  when  preparing  and  drawing-up  delegated  acts,  should  ensure  a  timely  and 
appropriate transmission of relevant documents to the Council. 

(17) 

In  order  to  avoid  conflicts  between  this  Directive  and  Council  Directive  2008/7/EC  of  12 
February 2008 concerning indirect taxes on the raising of capital20 that Directive should be 
amended accordingly. 

(18)  Since the objective of this Directive, namely to harmonise the essential features of a FTT at 
Union  level,  cannot  be  sufficiently  achieved  by  the  Member  States  and  can  therefore,  by 
reason of ensuring the proper functioning of the Single Market, be better achieved at Union 
level, the Union may adopt measures, in accordance with the principle of subsidiarity as set 
out  in  Article  5  of  the  Treaty  on  European  Union.  In  accordance  with  the  principle  of 
proportionality,  as  set  out  in  that  Article,  this  Directive  does  not  go  beyond  what  is 
necessary in order to achieve this objective, 

20 

OJ L 46, 21.2.2008, p. 11. 

EN 

14 

   EN 

                                                 
HAS ADOPTED THIS DIRECTIVE: 

Chapter I  
Subject matter, scope and definitions 

Article 1 
Subject matter and scope 

1. 

2. 

This Directive establishes the common system of financial transaction tax (FTT). 

This Directive shall apply to all financial transactions, on condition that at least one party 
to  the  transaction  is  established  in  a  Member  State  and  that  a  financial  institution 
established in the territory of a Member State is party to the transaction, acting either for its 
own account or for the account of another person, or is acting in the name of a party to the 
transaction. 

3. 

This Directive shall not apply to the following entities: 

(a) 

the European Financial Stability Facility; 

(b) 

subject  to  point  (c)  of  paragraph  4,  an  international  financial  institution  established 
by  two  or  more  Member  States,  which  has  the  purpose  to  mobilise  funding  and 
provide  financial  assistance  to  the  benefit  of  its  members  that  are  experiencing  or 
threatened by severe financing problems; 

(c)  Central Counter Parties (CCPs) where exercising the function of a CCP; 

(d)  Central  Securities  Depositories  (CSDs)  and  International  Central  Securities 

Depositories (ICSDs) where exercising the function of a CSD or ICSD. 

However, where an entity is not taxable pursuant to the first subparagraph, this  shall not 
preclude the taxability of its counterparty. 

4. 

This Directive shall not apply to the following transactions: 

(a)  primary  market  transactions  referred  to  in  point  (c)  of  Article  5  of  Commission 
Regulation (EC) No 1287/200621, except for the issue and redemption of shares and 
units of undertakings for collective investments in transferable securities (UCITS) as 
defined in Article 1(2) of Directive 2009/65/EC of the European Parliament and the 
Council22  and  alternative  investment  funds  (AIF)  as  defined  in  Article  4(1)(a)  of 
Directive 2011/61/EU of the European Parliament and the Council23;  

(b) 

transactions with the European Union, the European Atomic Energy Community, the 
European Central Bank, the European Investment Bank and with bodies set up by the 
European Union or the European Atomic Energy Community to which the Protocol 
on  the  privileges  and  immunities  of  the  European  Union  applies,  within  the  limits 

21 
22 
23 

OJ L 241, 2.9.2006, p. 1. 
OJ L 302, 17.11.2009, p. 32. 
OJ L 174, 1.7.2011, p. 1. 

EN 

15 

   EN 

                                                 
and under the conditions of that Protocol and the agreements for its implementation 
or  the  headquarters  agreements,  in  so  far  as  it  does  not  lead  to  distortion  of 
competition; 

(c) 

transactions with international organisations or bodies, other than those referred to in 
point  (b),  recognised  as  such  by  the  public  authorities  of  the  host  State,  within  the 
limits  and  under  the  conditions  laid  down  by  the  international  conventions 
establishing the bodies or by headquarters agreements; 

(d) 

transactions with the central banks of Member States. 

Article 2 
Definitions  

1. 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

For the purposes of this Directive, the following definitions shall apply: 

'Financial transaction' means any of the following: 

(a) 

(b) 

the  purchase  and  sale  of  a  financial  instrument  before  netting  and  settlement, 
including  repurchase  and  reverse  repurchase  and  securities  lending  and  borrowing 
agreements;  

the  transfer  between  entities  of  a  group  of  the  right  to  dispose  of  a  financial 
instrument  as  owner  and  any  equivalent  operation  implying  the  transfer  of  the  risk 
associated with the financial instrument, in cases not subject to point (a); 

(c) 

the conclusion or modification of derivatives agreements; 

'Financial  instruments'  means  financial  instruments  as  defined  Section  C  of  Annex  I  of 
Directive  2004/39/EC  of  the  European  Parliament  and  the  Council24,  and  structured 
products; 

'Derivatives  agreement'  means  a  financial  instrument  as  defined  in  points  (4)  to  (10)  of 
Section C of Annex I to the Directive 2004/39/EC;  

'Repurchase agreement' and 'reverse repurchase agreement' means an agreement referred to 
in Article 3 of Directive 2006/49/EC of the European Parliament and the Council25; 

'Securities  lending  agreement'  and  'securities  borrowing  agreement'  mean  an  agreement 
referred to in Article 3 of Directive 2006/49/EC; 

'Structured product' means tradable securities or other financial instruments offered by way 
of  a  securitisation  within  the  meaning  of  Article  4(36)  of  Directive  2006/48/EC  of  the 
European Parliament and the Council26 or equivalent transactions involving the transfer of 
risks other than credit risk; 

(7) 

'Financial institution' means any of the following: 

24 
25 
26 

OJ L 145, 30.4.2004, p. 1. 
OJ L 177, 30.6.2006, p. 201. 
OJ L 177, 30.6.2006, p. 1. 

EN 

16 

   EN 

                                                 
(a) 

an investment firm as defined in Article 4 of Directive 2004/39/EC; 

(b) 

a  regulated  market  as  defined  in  Article  4  of  Directive  2004/39/EC  and  any  other 
organised trade venue or platform; 

(c) 

a credit institution as defined in Article 4 of Directive 2006/48/EC; 

(d) 

(e) 

(f) 

(g) 

(h) 

(i) 

(j) 

an  insurance  and  reinsurance  undertaking  as  defined  in  Article  13  of  Directive 
2009/138/EC of the European Parliament and the Council27; 

an  undertaking  for  collective  investments  in  transferable  securities  (UCITS)  as 
defined in Article 1 of Directive 2009/65/EC and a management company as defined 
in Article 2 of Directive 2009/65/EC; 

a  pension  fund  or  an  institution  for  occupational  retirement  provision  as  defined  in 
Article 6(a) of Directive 2003/41/EC of the European Parliament and the Council28, 
an investment manager of such fund or institution;  

an  alternative  investment  fund  (AIF)  and  an  alternative  investment  fund  manager 
(AIFM) as defined in Article 4 of Directive 2011/61/EU;  

a  securitisation  special  purpose  entity  as  defined  in  Article  4  of  Directive 
2006/48/EC; 

a special purpose vehicle as defined in Article 13(26) of Directive 2009/138/EC; 

any  other  undertaking  carrying  out  one  or  more  of  the  following  activities,  in  case 
these activities constitute a significant part of its overall activity, in terms of volume 
or value of financial transactions:  

(i) 

activities referred to in points 1, 2, 3, 6 of Annex I of Directive 2006/48/EC; 

ii) 

trading  for  own  account  or  for  account  of  customers  with  respect  to  any 
financial instrument; 

(iii)  acquisition of holdings in undertakings;  

(iv)  participation in or issuance of financial instruments; 

(v) 

the provision of services related to activities referred to in point (iv). 

(8) 

(9) 

'Central  Counter  Party'  (CCP)  means  a  legal  entity  that  interposes  itself  between  the 
counterparties  to  a  trade  within  one  or  more  financial  markets,  becoming  the  buyer  to 
every seller and the seller to every buyer; 

'Netting'  shall  have  the  meaning  defined  in  Article  2  of  Directive  98/26/EC  of  the 
European Parliament and of the Council29; 

27 
28 
29 

OJ L 335, 17.12.2009, p. 1. 
OJ L 235, 23.9.2003, p. 10. 
OJ L 166, 11.6.1998, p. 45. 

EN 

17 

   EN 

                                                 
(10) 

2. 

'Notional  amount'  means  the  underlying  nominal  or face amount that is used to calculate 
payments made on a given derivative agreement. 

The  Commission  shall,  in  accordance  with  Article  13  adopt  delegated  acts  laying  down 
detailed  rules  regarding  the  determination  whether  activities  as  referred  to  in  paragraph 
1(7)(j) constitute a significant part of the undertaking's overall activity. 

Article 3 
Establishment 

1. 

For the purposes of this Directive, a financial institution shall be deemed to be established 
in the territory of a Member State where any of the following conditions is fulfilled:  

(a) 

it  has  been  authorised  by  the  authorities  of  that  Member  State  to  act  as  such,  in 
respect of transactions covered by that authorisation; 

(b) 

it has its registered seat within that Member State; 

(c) 

its permanent address or usual residence is located in that Member State; 

(d) 

(e) 

it  has  a  branch  within  that  Member  State,  in  respect  of  transactions  carried  out  by 
that branch; 

it is party, acting either for its own account or for the account of another person, or is 
acting in the name of a party to the transaction, to a financial transaction with another 
financial institution established in that Member State pursuant to points (a), (b), (c) 
or (d), or with a party established in the territory of that Member State and which is 
not a financial institution. 

2. 

3. 

4. 

Where more than one of the conditions in the list set out in paragraph 1 is fulfilled, the first 
condition  met  from  the  start  of  the  list  in  descending  order  shall  be  relevant  for 
determining the Member State of establishment. 

Notwithstanding  paragraph  1,  a  financial  institution  shall  not  be  considered  established 
within the meaning of that paragraph, in case the person liable for payment of FTT proves 
that there is no link between the economic substance of the transaction and the territory of 
any Member State. 

A  person  which  is  not  a  financial  institution  shall  be  deemed  to  be  established  within  a 
Member State if its registered seat or, in case of a natural person, if its permanent address 
or  usual  residence  is  located  in  that  State,  or  it  has  a  branch  in  that  State,  in  respect  of 
financial transactions carried out by that branch. 

Chapter II  
Chargeability, taxable amount and rates 

Article 4 
Chargeability of FTT 

1. 

The FTT shall become chargeable for each financial transaction at the moment it occurs. 

EN 

18 

   EN 

2. 

Subsequent  cancellation  or  rectification  of  a  financial  transaction  shall  have  no  effect  on 
chargeability, except for cases of errors. 

Article 5 
Taxable amount of the FTT in the case of financial transactions other than those related to 
derivatives agreements 

In the case of financial transactions other than those referred to in point 1(c) of Article 2(1) 
and, in respect of derivative agreements, in points 1(a) and 1(b) of Article 2(1), the taxable 
amount shall be everything which constitutes consideration paid or owed, in return for the 
transfer, from the counterparty or a third party. 

Notwithstanding paragraph 1, in the cases referred to in that paragraph the taxable amount 
shall be the market price determined at the time the FTT becomes chargeable: 

(a)  where the consideration is lower than the market price; 

(b) 

in the cases referred to in Article 2(1)(b). 

For the  purposes  of paragraph 2,  the  market price shall mean the full amount that would 
have been paid as consideration for the financial instrument concerned in a transaction at 
arm's length. 

1. 

2. 

3. 

Article 6 
Taxable amount in the case of financial transactions related to derivatives agreements 

In  the  case  of  financial  transactions  referred  to  in  point  1(c)  of  Article  2(1)  and,  in  respect  of 
derivative agreements, in points 1(a) and 1(b) of Article 2(1), the taxable amount of the FTT shall 
be the notional amount of the derivatives agreement at the time of the financial transaction. 

Where  more  than  one  notional  amount  is  identified,  the  highest  amount  shall  be  used  for  the 
purpose of determining the taxable amount.  

Article 7 
Common provisions on taxable amount 

Where the value relevant, under Article 5 or Article 6, for the determination of the taxable amount 
is  expressed,  in  whole  or  in  part,  in  a  currency  other  than  that  of  the  taxing  Member  State,  the 
exchange  rate  applicable  shall  be  the  latest  selling  rate  recorded,  at  the  time  the  FTT  becomes 
chargeable,  on  the  most  representative  exchange  market  of  the  Member  State  concerned,  or  at  an 
exchange  rate  determined  by  reference  to  that  market,  in  accordance  with  the  rules  laid  down  by 
that Member State.  

Article 8 
Application, structure and level of rates 

Member  States  shall  apply  the  rates  of  FTT  in  force  at  the  time  when  the  tax  becomes 
chargeable. 

The rates shall be fixed by each Member State as a percentage of the taxable amount. 

19 

   EN 

1. 

2. 

EN 

Those rates shall not be lower than:  

(a)  0.1% in respect of the financial transactions referred to in Article 5;  

(b)  0.01% in respect of financial transactions referred to in Article 6. 

3. 

Member  States  shall  apply  the  same  rate  to  all  financial  transactions  that  fall  under  the 
same category pursuant to paragraph 2 (a) and (b). 

Chapter III 
Payment of FTT, related obligations and prevention of evasion, 
avoidance and abuse 

Article 9 
Person liable for payment of FTT to the tax authorities 

1. 

In respect of each financial transaction, FTT shall be payable by each financial institution 
which fulfils any of the following conditions:  

(a) 

it is party to the transaction, acting either for its own account or for the account of 
another person; 

2. 

3. 

4. 

1. 

2. 

(b) 

it is acting in the name of a party to the transaction; or 

(c) 

the transaction has been carried out on its account. 

Where  a  financial  institution  acts  in  the  name  or  for  the  account  of  another  financial 
institution only that other financial institution shall be liable to pay FTT. 

Each party to a transaction, including persons other than financial institutions shall become 
jointly  and  severally  liable  for  the  payment  of  the  tax  due  by  a  financial  institution  on 
account of that transaction, in case that financial institution has not paid the tax due by it 
within the time limit set out in Article 10(4). 

Member States may provide that a person other than the persons liable for payment of FTT 
referred to in paragraphs 1, 2 and 3 of this Article is to be held jointly and severally liable 
for the payment of the tax. 

Article 10 
Provisions relating to time limits for the payment of FTT, to obligations intended to ensure 
payment, to the verification of payment 

Member  States  shall  lay  down  registration,  accounting,  reporting  obligations  and  other 
obligations intended to ensure that FTT due to the tax authorities is effectively paid.  

Member States shall adopt measures to ensure that every person liable for payment of FTT 
submits to the tax authorities a return setting out all the information needed to calculate the 
FTT that has become chargeable during a period of one month including the total value of 
the transactions taxed at each rate. The FTT return shall be submitted by the tenth day of 
the month following the month during which the FTT became chargeable. 

EN 

20 

   EN 

3. 

4. 

5. 

1. 

2. 

3. 

Member  States  shall,  where  financial  institutions  are  not  subject  to  Article  25(2)  of 
Directive 2004/39/EC, ensure the keeping at the disposal of the competent authority, for at 
least five years, of the relevant data relating to all financial transactions which they have 
carried  out,  whether  in  their  own  name  or  in  the  name  of  another  person,  for  their  own 
account or for the account of another person; 

Member States shall ensure that any FTT due is paid to the tax authorities at the following 
points in time: 

(a) 

at the moment when the tax becomes chargeable in case the transaction is carried out 
electronically; 

(b)  within three working days from the moment the tax becomes chargeable in all other 

cases. 

Member States shall ensure that the authorities competent in the matter verify whether the 
tax has been correctly paid. 

Article 11 
Specific provisions relating to the prevention of evasion, avoidance and abuse 

Member States shall adopt measures to prevent tax evasion, avoidance and abuse. 

The Commission may,  in  accordance with Article 13 adopt delegated acts specifying the 
measures to be taken pursuant to paragraph 1 by the Member States. 

Member  States  shall,  wherever  necessary,  make  use  of  the  provisions  adopted  by  the 
Union  regarding  administrative  cooperation  in  tax  matters,  and  in  particular  by  Council 
Directives  2011/16/EU  and  2010/24/EU.  They  shall  also  make  use  of  already  existing 
reporting and data maintenance obligations related to financial transactions. 

Chapter IV 
Final provisions 

Article 12 
Other taxes on financial transactions 

Member  States  shall  not  maintain  or  introduce  taxes  on  financial  transactions  other  than  the  FTT 
object of this Directive or value-added tax as provided for in Council Directive 2006/112/EC30. 

Article 13 
Exercise of the delegation 

1. 

The  power  to  adopt  delegated  acts  is  conferred  on  the  Commission  subject  to  the 
conditions laid down in this Article. 

30 

OJ L 347, 11.12.2006, p. 1–118. 

EN 

21 

   EN 

                                                 
2. 

3. 

4. 

5. 

The delegation of powers referred to in Articles 2(2) and 11(2) shall be conferred for an 
indeterminate period of time from the date referred to in Article 18. 

The delegation of power referred to in Articles 2(2) and 11(2) may be revoked at any time 
by the Council. A  decision of revocation  shall put an end to  the delegation of the power 
specified  in  that  decision.  It  shall  take  effect  the  day  following  the  publication  of  the 
decision in the Official Journal of the European Union or at a later date specified therein. 
It shall not affect the validity of the delegated acts already in force. 

As soon as it adopts a delegated act, the Commission shall notify it to the Council. 

A delegated act adopted pursuant to Articles 2(2) and 11(2) shall enter into force only if no 
objection has been expressed by the Council within a period of 2 months of notification of 
that act to the Council or if, before the expiry of that period, the Council has informed the 
Commission  that  it  will  not  object.  That  period  shall  be  extended  by  2  months  at  the 
initiative of the Council. 

Article 14 
Information of the European Parliament 

The European Parliament shall be informed of the adoption of delegated acts by the Commission, of 
any objection formulated to them, or of the revocation of the delegation of powers by the Council. 

Article 15 
Amendment of Directive 2008/7/EC 

Directive 2008/7/EC is amended as follows: 

(1) 

In Article 6(1) point (a) is deleted.  

(2)  After Article 6, the following Article is inserted: 

"Article 6a 

Relationship with Directive …/…/EU 

This Directive shall be without prejudice to Council Directive …/…/EU31." 

Article16 
Review clause  

Every five years and for the first time by 31 December 2016, the Commission shall submit to the 
Council  a  report  on  the  application  of  this  Directive  and,  where  appropriate,  a  proposal  for  its 
modification.  

In  that  report  the  Commission  shall,  at  least,  examine  the  impact  of  the  FTT  on  the  proper 
functioning of the internal market, the financial markets and the real economy and it shall take into 
account the progress on taxation of the financial sector in the international context. 

31 

OJ L ….., …., p.  

EN 

22 

   EN 

                                                 
Article17 
Transposition  

1. 

Member  States  shall  adopt  and  publish,  by  31  December  2013  at  the  latest,  the  laws, 
regulations  and  administrative  provisions  necessary  to  comply  with  this  Directive.  They 
shall  forthwith  communicate  to  the  Commission  the  text  of  those  provisions  and  a 
correlation table between those provisions and this Directive.  

They shall apply those provisions from 1 January 2014. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member  States  shall  communicate  to  the  Commission  the  text  of  the  main  provisions  of 
national law which they adopt in the field covered by this Directive. 

This  Directive  shall  enter  into  force  on  the  twentieth  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

Article 18 
Entry into force 

Article 19 
Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the Council 
The President 

EN 

23 

   EN 

 
 
ANNEX  

LEGISLATIVE FINANCIAL STATEMENT  

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Council  Directive  on  a  common  system  of  financial  transaction  tax  and  amending  Directive 
2008/7/EC 

1.2. 

Policy area(s) concerned in the ABM/ABB structure 

14 05 Taxation Policy 

1.3. 

Nature of the proposal/initiative  

The proposal relates to a new action 

1.4. 

Objective(s)  

1.4.1.  The Commission's multiannual strategic objective targeted by the proposal 

Financial stability 

1.4.2. 

Specific objectives and ABM/ABB activity(ies) concerned 

Specific Objective No.3 

To develop new tax initiatives and actions to support EU policy objectives 

ABM/ABB activity(ies) concerned 

Title 14 Taxation and Customs Union; ABB 05 Taxation Policy 

1.4.3.  Expected result(s) 

To avoid fragmentation in the internal market for financial services, bearing in mind the increasing 
number of uncoordinated national tax measures being put in place. 

To  ensure  that  financial  institutions  make  a  fair  contribution  to  covering  the  costs  of  the  recent 
crisis, and to ensure even taxation of the sector vis-à-vis other sectors. 

To  create  appropriate  disincentives  for  overly  risky  transactions  and  to  complement  regulatory 
measures aimed at avoiding future crisis. 

1.5. 

Grounds for the proposal/initiative 

1.5.1.  Requirement(s) to be met in the short or long term 

Contribute to the overall objective of stability in the EU in the aftermath of the financial crisis 

EN 

24 

   EN 

1.5.2.  Added value of EU involvement 

A fragmentation of financial markets across activities and across borders can only be avoided and 
equal  treatment  of  financial  institutions  in  the  EU  and,  ultimately,  the  proper  functioning  of  the 
internal market, can only be ensured through action at EU level. 

1.5.3.  Lessons learned from similar experiences in the past 

Introducing  a  broad-based  FTT  at  national  level  achieving  the  three  above  objectives  without 
serious delocalisation effects has proven to be hardly possible (example of Sweden)". 

1.5.4.  Coherence and possible synergy with other relevant instruments 

Taxes are part of the global resolution framework. Moreover, the Commission has proposed to use 
the proceeds of the FTT as a future own resource 

1.6. 

Duration and financial impact  

Proposal of unlimited duration 

1.7.  Management method(s) envisaged  

The proposal has financial impact on the EU by increasing administrative costs. 

Centralised direct management by the Commission 

Centralised indirect management with the delegation of implementation tasks to: 

A person entrusted with the implementation of specific actions pursuant to Title V of the Treaty on 
European  Union  and  identified  in  the  relevant  basic  act  within  the  meaning  of  Article  49  of  the 
Financial Regulation. 

Shared management with the Member States 

Decentralised management with third countries 

Joint management with international organisations (to be specified). 

2. 

MANAGEMENT MEASURES 

2.1.  Monitoring and reporting rules  

Member States must take appropriate measures for FTT to be levied accurately and timely, which 
includes measures of verification. 

The  provision  of  appropriate  measures  to  ensure  payment  of  the  tax  and  to  monitor  and  verify 
correct payment is left to Member States. 

EN 

25 

   EN 

2.2.  Management and control system  

2.2.1.  Risk(s) identified 

1. Delays in the transposition of the Directive at Member States' level 

2.Risk of evasion, avoidance and abuse 

3. Risk of relocation 

2.2.2.  Control method(s) envisaged  

Article 11 of the Directive mentions the specific provisions relating to the prevention of evasion, 
avoidance and abuse: delegated acts and administrative cooperation in tax matters. 

The  risk  of  relocation  are  tackled  by  the  choice  of  an  appropriate  set  of  tax  rates  and  a  broad 
definition of the taxable base. 

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures. 

3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected 

•  Existing expenditure budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of  
expenditure 

Contribution  

Heading of 
multiannual 
financial 
framework 

Number  
[Description………….] 

Diff./non-diff
(1) 

from 
EFTA2 
countries 

from 
candidate 
countries3 

from third 
countries 

within the 
meaning of 
Article 
18(1)(aa) of 
the Financial 
Regulation  

[XX.YY.YY.YY] 

Diff./non-diff. 

YES/NO 

YES/NO 

YES/NO 

YES/NO 

•  New budget lines requested  

In order of multiannual financial framework headings and budget lines. 

Heading of 
multiannual 

Budget line 

Type of 

Contribution  

1 
2 
3 

Diff. = Differentiated appropriations / Non-Diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidate countries from the Western Balkans. 

EN 

26 

   EN 

 
 
                                                 
expenditure 

financial 
framework  Number  

[Heading…………..] 

Diff./non-diff. 

from 
EFTA 
countries 

from 
candidate 
countries 

from third 
countries 

within the 
meaning of 
Article 
18(1)(aa) of 
the Financial 
Regulation  

[XX.YY.YY.YY] 

YES/NO 

YES/NO 

YES/NO 

YES/NO 

3.2. 

Estimated impact on expenditure  

3.2.1. 

Summary of estimated impact on expenditure  

Heading of 
multiannual 
financial 
framework:  

DG: <…….> 

EUR million (to 3 decimal places) 

Number 

[Heading ……………...…………………………………………….] 

Year
N4 

Year
N+1 

Year
N+2 

Year
N+3 

… enter as many 
years as necessary 
to show the duration 
of the impact (see 
point 1.6) 

TOTAL 

(cid:121) Operational appropriations  

Number of budget line 

Number of budget line 

Commitments 
Payments 
Commitments 
Payments 

(1) 
(2) 
(1a) 
(2a) 

Appropriations of an administrative nature financed 
from the envelope for specific programmes5  

Number of budget line 

TOTAL 
appropriations 
for DG <…….> 

Commitments 

(3) 

=1+1a 
+3 

=2+2a 

N/A  N/A  N/A  N/A  N/A  N/A  N/A 

N/A 

Payments 

N/A  N/A  N/A  N/A  N/A  N/A  N/A 

N/A 

(cid:121) TOTAL operational 
appropriations  

Commitments 

Payments 

+3 

(4) 

(5) 

N/A  N/A  N/A  N/A 

N/A  N/A  N/A 

N/A  N/A  N/A  N/A 

N/A  N/A  N/A 

N/A 

N/A 

4 
5 

Year N is the year in which implementation of the proposal/initiative starts. 
Technical  and/or  administrative  assistance  and  expenditure  in  support  of  the  implementation  of  EU 
programmes and/or actions (former "BA" lines), indirect research, direct research. 

EN 

27 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
(cid:121) TOTAL appropriations of an 
administrative nature financed from the 
envelope for specific programmes  

(6) 

TOTAL 
appropriations  
under HEADING 
<….> 
of the multiannual 
financial framework 

Commitments 

=4+ 6 

N/A  N/A  N/A  N/A 

N/A  N/A  N/A 

N/A 

Payments 

=5+ 6 

N/A  N/A  N/A  N/A 

N/A  N/A  N/A 

N/A 

If more than one heading is affected by the proposal / initiative: 

(cid:121) TOTAL operational 
appropriations  

Commitments 

Payments 

appropriations 

(cid:121)  TOTAL 
an 
administrative  nature  financed  from  the 
envelope for specific programmes  

of 

(4) 

(5) 

(6) 

TOTAL 
appropriations  
under HEADINGS 1 
to 4 
of the multiannual 
financial framework 
(Reference amount) 

Commitments 

=4+ 6 

N/A  N/A  N/A  N/A 

N/A  N/A  N/A 

N/A 

Payments 

=5+ 6 

N/A  N/A  N/A  N/A 

N/A  N/A  N/A 

N/A 

Heading of multiannual financial framework:  

5 

" Administrative expenditure " 

EUR million (to 3 decimal places) 

Year
2013 

Year
2014 

Year 
2015 

Year 
2016 

From  
2017 
onwards 

DG: TAXUD 

(cid:121) Human resources  

0.254 

0.762 

0.762 

0.762 

0.762 

(cid:121) Other administrative expenditure  

0.040 

0.036 

0.036 

0.036 

0.036 

TOTAL DG TAXUD 

0.294 

0.798 

0.798 

0.798 

0.798 

TOTAL appropriations 
under HEADING 5 
of the multiannual financial framework  

(Total 
commitments 
= Total 
payments) 

0.294 

0.798 

0.798 

0.798 

0.798 

EUR million (to 3 decimal places) 

Year
2013 

Year
2014 

Year 
2015 

Year 
2016 

From  
2017 
onwards 

TOTAL appropriations  
under HEADINGS 1 to 5 
of the multiannual financial framework  

Commitments 

0.294 

0.798 

0.798 

0.798 

0.798 

Payments 

0.294 

0.798 

0.798 

0.798 

0.798 

EN 

28 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.2.  Estimated impact on operational appropriations  

–  X  The proposal/initiative does not require the use of operational appropriations 

3.2.3.  Estimated impact on appropriations of an administrative nature 

3.2.3.1.  Summary  

–  X  The proposal/initiative requires the use of administrative appropriations, as explained 

below: 

EUR million (to 3 decimal places) 

HEADING 5 
of the multiannual financial 
framework 

Year 
2013 

Year 
2014 

Year 
2015 

Year 
2016 

From  
2017 onwards 

Human resources  

0.254 

0.762 

0.762 

0.762 

0.762 

Other administrative 
expenditure  

Subtotal HEADING 5 
of the multiannual financial 
framework  

Outside HEADING 56 
of the multiannual financial 
framework  

Human resources  

Other expenditure  
of an administrative nature 

Subtotal  
outside HEADING 5 
of the multiannual financial 
framework  

0.040 

0.036 

0.036 

0.036 

0.036 

0.294 

0.798 

0.798 

0.798 

0.798 

N/A 

N/A 

N/A 

N/A 

N/A 

TOTAL 

0.294 

0.798 

0.798 

0.798 

0.798 

3.2.3.2.  Estimated requirements of human resources  

–  X  The proposal/initiative requires the use of human resources, as explained below: 

6 

Technical  and/or  administrative  assistance  and  expenditure  in  support  of  the  implementation  of  EU 
programmes and/or actions (former "BA" lines), indirect research, direct research. 

EN 

29 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Estimate to be expressed in full amounts (or at most to one decimal place) 

Year
2013 

Year
2014 

Year 
2015 

Year 
2016 

From  
2017 
onwards 

(cid:121) Establishment plan posts (officials and temporary agents) 

14 01 01 01 (Headquarters and Commission’s Representation Offices) 

0.254 

0.762 

0.762 

0.762 

0.762 

14 01 01 02 (Delegations) 

14 01 05 01 (Indirect research) 

10 01 05 01 (Direct research) 
(cid:121) External personnel (in Full Time Equivalent unit: FTE)7 

14 01 02 01 (CA, INT, SNE from the "global envelope") 

14 01 02 02 (CA, INT, JED, LA and SNE in the delegations) 

XX 01 04 yy 8 

- at Headquarters9 

- in delegations  

XX 01 05 02 (CA, INT, SNE - Indirect research) 

10 01 05 02 (CA, INT, SNE - Direct research) 

Other budget lines (specify) 

TOTAL 

14 is the policy area or budget title concerned. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

0.254 

0.762 

0.762 

0.762 

0.762 

The  human  resources  required  will  be  met  by  staff  from  the  DG  who  are  already  assigned  to 
management of the action and/or have been redeployed within the DG, together if necessary with 
any  additional  allocation  which  may  be  granted  to  the  managing  DG  under  the  annual  allocation 
procedure and in the light of budgetary constraints. 

Description of tasks to be carried out: 

Officials and temporary 
agents 

The current staff allocation of DG TAXUD does not really take the totally issue of a 
common system FTT into account and will require internal redeployment. Main tasks of the 
assigned officials will be: to elaborate the technicalities on the practical functioning of the 
tax so as to help the negotiation process, monitor the subsequent implementation, prepare 
legal interpretations and working documents, contribute to the delegated acts on anti-
avoidance/antri-abuse provisions, prepare infringement procedures as appropriate etc. 

3.2.4.  Compatibility with the current multiannual financial framework  

–  X  Proposal/initiative is compatible the current multiannual financial framework. 

3.2.5.  Third-party contributions  

–  The proposal/initiative does not provide for co-financing by third parties  

7 

8 
9 

CA= Contract Agent; INT= agency staff ("Intérimaire"); JED= "Jeune Expert en Délégation" (Young Experts 
in Delegations); LA= Local Agent; SNE= Seconded National Expert. 
Under the ceiling for external personnel from operational appropriations (former "BA" lines). 
Essentially for Structural Funds, European Agricultural Fund for Rural Development (EAFRD) and European 
Fisheries Fund (EFF). 

EN 

30 

   EN 

                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.3. 

Estimated impact on revenue  

–  X  Proposal/initiative has no financial impact on revenue. 

EN 

31 

   EN