Proposal for a COUNCIL DIRECTIVE implementing enhanced cooperation in the area of financial transaction tax
Date: 2013-02-14
Institutions: European Commission
Subjects: Austria, Belgium, Estonia, European tax cooperation, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia, Spain, enhanced cooperation, financial transaction, indirect tax, tax harmonisation

EUROPEAN 
COMMISSION 

Brussels, 14.2.2013  
COM(2013) 71 final 

2013/0045 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

implementing enhanced cooperation in the area of financial transaction tax 

{SWD(2013) 28 final} 
{SWD(2013) 29 final} 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

1.1. 

Background and history 

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.  

Therefore, on 28 September 2011 the Commission tabled a proposal for a Council Directive on a 
common system of financial transaction tax (FTT) and amending Directive 2008/7/EC1. The legal 
basis for the proposed Council Directive was Article 113 TFEU, as the proposed provisions aim at 
the  harmonisation  of  legislation  concerning  the  taxation  of  financial  transactions  to  the  extent 
necessary  to  ensure  the  proper  functioning  of  the  internal  market  for  transactions  in  financial 
instruments and to avoid distortion of competition. This legal basis prescribes Council unanimity in 
accordance  with  a  special  legislative  procedure,  after  consulting  the  European  Parliament  and  the 
Economic and Social Committee.  

The main objectives of this proposal were:  

– 

– 

– 

harmonising  legislation  concerning  indirect  taxation  on  financial  transactions,  which  is 
needed to ensure the proper functioning of the internal market for transactions in financial 
instruments  and  to  avoid  distortion  of  competition  between  financial  instruments,  actors 
and market places across the European Union, and at the same time 

ensuring that financial institutions make a fair and substantial contribution to covering the 
costs  of  the  recent  crisis  and  creating  a  level  playing  field  with  other  sectors  from  a 
taxation point of view2, and  

creating  appropriate  disincentives  for  transactions  that  do  not  enhance  the  efficiency  of 
financial markets thereby complementing regulatory measures to avoid future crises. 

Given the extremely high mobility of most of the transactions to be potentially taxed, it was and still 
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, and 
among products and actors can only be avoided and equal treatment of financial institutions in the 
EU and thus ultimately, the proper functioning of the internal market, can only be ensured through 
action  at  EU  level.  The  development  of  a  common  system  of  financial  transaction  tax  in  the  EU 
reduces the risk of distortion of markets through a taxation-induced geographical delocalisation of 

1 
2 

COM(2011) 594 final. 
Financial institutions, either directly or indirectly, largely benefited from the rescue and guarantee operations 
(pre-)financed  by  the  European  taxpayer  in  the  course  of  2008  to  2012.  These  operations,  together  with  the 
faltering of economic activity caused by the spread of uncertainty about the stability of the overall economic 
and financial system have triggered a deterioration in the public finance balances across Europe by more than 
20% of GDP. Also, most financial and insurance services are exempted from VAT. 

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activities. Furthermore, such common system can also ensure tax neutrality through harmonisation 
with a broad scope, notably to also cover very mobile products such as derivatives, mobile actors 
and market places, thus also contributing to less double-taxation or double-non-taxation.  

The  proposal  therefore  provided  for  harmonisation  of  Member  States’  taxes  on  financial 
transactions  to  ensure  the  smooth  functioning  of  the  single  market  and  thus  set  out  the  essential 
features of a common system for a broad based FTT in the EU. 

Since  around  the  time  of  the  initial  Commission  proposal  the  case  for  harmonisation  has  been 
further  illustrated  by  developments  in  practice:  France  has  introduced  a  national  tax  on  certain 
financial  transactions  since  1  August  2012  and  Spain,  Italy  and  Portugal  have  recently  made 
announcements  of  introducing  such  national  taxes  as  well  –  all  with  different  scope,  rates  and 
technical design features. 

The European Parliament delivered its favourable opinion on 23 May 20123 and the Economic and 
Social Committee on 29 March 20124 on the Commission’s initial proposal. Also the Committee of 
Regions adopted a favourable opinion on 15 February 20125. 

The proposal and variants thereof were extensively discussed in the meetings of the Council which 
started  under  the  Polish  Presidency6  and  continued  at  an  accelerated  pace  under  the  Danish 
Presidency,  but  failed  to  get  the  required  unanimous  support  because  of  fundamental  and  un-
bridgeable differences amongst Member States.  

At the Council meetings of 22 June and 10 July 2012, it was ascertained that essential differences in 
opinion persist as regards the need to establish a common system of FTT at EU level and that the 
principle of harmonised tax on financial transactions will not receive unanimous support within the 
Council in the foreseeable future.  

It  follows  from  the  above  that  the  objectives  of  a  common  system  of  FTT,  as  discussed  in  the 
Council upon the Commission's initial proposal, cannot be attained within a reasonable period by 
the Union as a whole. 

On the basis of the request of eleven Member States (Belgium, Germany, Estonia, Greece, Spain, 
France,  Italy,  Austria,  Portugal,  Slovenia  and  Slovakia)  the  Commission  submitted  a  proposal7  to 
the Council for authorising enhanced cooperation in the area of financial transaction tax.  

All  Member  States  specified  in  their  requests  that  the  scope  and  objectives  of  the  Commission's 
legislative  proposal  implementing  enhanced  cooperation  should  be  based  on  the  Commission's 
initial  FTT  proposal.  Furthermore,  they  specified  that  evasive  actions,  distortions  and  transfers  to 
other jurisdictions are to be avoided. 

3 
4 
5 
6 

7 

P7_TA-(2012)0217. 
ECO/321 – CESE 818/2012 (OJ C 181, 21.06.2012, p. 55). 
CDR 332/2011 (OJ C 113, 18.04.2012, p. 7). 
FTT was first on the agenda of the Council on Economic and Financial Affairs on 8 November 2011 and then 
at three subsequent meetings in March, June and July 2012. From December 2011 to June 2012 seven Council 
Working Party meetings on Tax Questions – Indirect taxation were devoted to the subject. 
COM(2012) 631 final/2. 

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The  present  proposal  for  a  Directive  concerns  the implementation of the enhanced cooperation in 
the  area  of  FTT,  in  accordance  with  the  authorisation  of  the  Council  of  22  January  2013,  issued 
following the European Parliament's consent given on 12 December 2012. 

In the light of this new context of enhanced cooperation, the 2011 Commission proposal mentioned 
above becomes without object and the Commission therefore intends to withdraw it.  

The Commission Proposal for a Council Decision on the system of own resources of the European 
Union of 29 June 20118, as amended on 9 November 20119, set out that part of receipts generated 
by  the  FTT  shall  constitute  an  own  resource  for  the  EU  budget.  This  would  imply  that  the  GNI-
based resource drawn from the participating Member States would be reduced accordingly.  

1.2. Objectives of the proposal 

The  general  objectives  of  this  proposal  are  those  of  the  Commission's  original  proposal  of  2011. 
The recent and ongoing global economic and financial crisis had a serious impact on the economies 
and public finances in the EU. The financial sector has played a major role in causing the economic 
crisis  whilst  governments  and  European  citizens  at  large  have  born  the  costs.  Even  though  it  is 
made  of  a  wide  variety  of  market  actors,  the  financial  sector  at  large  has  experienced  high 
profitability over the last two decades which could be partially the result of an (implicit or explicit) 
safety  net  provided  by  governments,  combined  with  financial  sector  regulation  and  VAT 
exemption. 

Under these circumstances, some Member States started to implement additional forms of financial 
sector taxation, whilst other Member States already had in place specific tax regimes for financial 
transactions. The current situation leads to the following undesirable effects: 

– 

– 

– 

a  fragmentation  of  the  tax  treatment  in  the  internal  market  for  financial  services  - 
bearing in mind the increasing number of uncoordinated national tax measures being 
put in place- with the consequent possibilities of distortions of competition between 
financial  instruments,  actors  and  market  places  across  the  European  Union  and 
double taxation or double non-taxation; 

the financial institutions do not make a fair and substantial contribution to covering 
the  cost  of  the  recent  crisis  and  a  level  playing  field  with  other  sectors  from  a 
taxation point of view is not ensured; 

taxation policy neither contributes to providing disincentives for transactions which 
do not enhance the efficiency of financial markets but which might only divert rents 
from  the  non-financial  sector  of  the  economy  to  financial  institutions  and,  thus, 
trigger  over-investment  in  activities  that  are  not  welfare  enhancing,  nor  does  it 
contribute  alongside  ongoing  regulatory  and  supervisory  measures  to  avoid  future 
crises in the financial services sector. 

The implementation of a common system of financial transaction tax amongst a sufficient number 
of Member States would entail immediate tangible advantages on  all three points listed above, in 

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9 

COM(2011) 510 final. 
http://ec.europa.eu/budget/library/biblio/documents/fin_fwk1420/proposal_council_own_resources_en.pdf 
COM(2011) 739 final. 
http://ec.europa.eu/budget/library/biblio/documents/fin_fwk1420/COM_2011_0739_EN.pdf 

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regard to financial transactions covered by enhanced cooperation. In connection with these points, 
the  position  of  the  participating  Member  States  in  terms  of  relocation  risks,  tax  revenues  and 
efficiency  of  the  financial  market  and  avoidance  of  double  taxation  or  non-taxation  would  be 
improved.  

The  decision  authorising  enhanced  cooperation  found  that  all  the  requirements  of  the  Treaties  in 
regard  to  such  cooperation  are  fulfilled,  and  in  particular  that  the  competences,  rights  and 
obligations  of  non-participating  Member  States  are  respected.  The  present  proposal  sets  out  the 
necessary substance for the cooperation thus authorised, in line with the Treaty provisions.  

1.3. 

General approach and relationship with the Commission's initial proposal 

This  proposal  is  based  on  the  Commission's  original  proposal  of  2011  in  that  it  respects  all  the 
essential principles thereof. However, some adaptations were made:  

– 

– 

– 

to take account of the new context of enhanced cooperation; this means in particular that 
the 'FTT jurisdiction' is limited to participating Member States, that transactions carried out 
within  a  participating  Member  State  which  would  have  been  taxed  under  the  original 
proposal  remain  taxable,  and  that  it  is  ensured  that  Council  Directive  2008/7/EC  of  12 
February  2008  concerning  indirect  taxes  on  the  raising  of  capital10,  whose  modification 
had been proposed in the initial proposal, remains unaffected; 

to some of the proposed provisions for the sake of clarity and  

to  further  strengthen  anti-avoidance  of  taxation;  this  is  achieved  through  rules  whereby 
taxation follows the "issuance principle" as a last resort, which compounds the "principle 
of establishment", which is maintained as the main principle. This addition reflects notably 
the requests of  the  interested  Member States which referred to the need to avoid evasive 
actions,  distortions  and  transfers  to  other  jurisdictions.  Indeed,  by  complementing  the 
residence principle with elements of the issuance principle, it will be less advantageous to 
relocate  activities  and  establishments  outside  the  FTT  jurisdictions,  since  trading  in  the 
financial  instruments  subject  to  taxation  under  the  latter  principle  and  issued  in  the  FTT 
jurisdictions will be taxable anyway.  

2. 

RESULTS  OF  CONSULTATIONS  WITH  THE  INTERESTED  PARTIES  AND 
IMPACT ASSESSMENTS 

2.1. 

External consultation and expertise 

The  original  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  accompanying  the  original  proposal.  The  results  of  the 
consultation process and the external input are reflected in this impact assessment. 

10 

OJ L 46, 21.2.2008, p.11. 

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The  present  proposal  does  not  differ  markedly  from  the  Commission's  September  2011  proposal 
and  retains  the  same  solutions  of  principle  for  a  common  system  of  FTT  under  enhanced 
cooperation (e.g. as regards the scope of the tax, the establishment of a financial institution involved 
in a transaction as the connecting factor, the taxable amount and rates and the person liable to pay 
the  tax  to  the  tax  authorities)  and  thus  no  new  specific  consultations  were  initiated  by  the 
Commission. 

However, the Commission also benefited from the consultation of all interested parties over the last 
year, such as Member States, the European and national parliaments, representatives of the financial 
industry from within and from outside the European Union, the academic world, non-governmental 
organisations, and the results of ad hoc external studies that had been published in the aftermath of 
the  tabling  of  the  Commission's  initial  proposal  on  a  common  system  of  FTT  for  the  entire 
European Union. 

Commission  representatives  participated  in  numerous  public  events  across  and  outside  Europe  on 
the establishment of a common system of financial transaction tax. Also, the Commission actively 
participated  in  a  dialogue  with  those  national  parliaments  and  their  relevant  committees  that  so 
wished discussing the original Commission proposal. 

2.2. 

Impact assessment 

The Commission services carried out an impact assessment which accompanies its original proposal 
adopted  on  28  September  2011.  Further  additional  technical  analysis  of  this  proposal  has  been 
presented on the Commission's website11. As requested by the Member States that have sought the 
authorisation for enhanced cooperation, the scope and objectives of this proposal are based on the 
Commission’s initial proposal. Therefore, the fundamental building blocks of the latter proposal are 
not  changed,  so  that  a  new  impact  assessment  covering  the  same  subject  area  has  not  been 
considered appropriate.  

However, Member States had weighed different alternative policy options within the framework of 
the  initial  Commission  proposal.  Also,  this  new  proposal  is  intended  to  implement  enhanced 
cooperation, as opposed to the initial proposal for a directive to be applied by all Member States, 
and Member States have specifically shown interest in learning more on the specific mechanisms 
that  might  be  at  work  in  this  context  and  their  main  effects.  Therefore,  the  Commission  services 
have undertaken an additional analysis of these policy options and impacts that complements and 
reviews, where appropriate, the findings of the impact assessment accompanying the initial proposal 
of 2011.  

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

3.1. 

Legal basis 

Council Decision 2013/52/EU of 22 January 2013 authorising enhanced cooperation in the area of 
financial transaction tax12 authorised the Member States listed in its Article 1 to establish enhanced 
cooperation in the area of FTT. 

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12 

http://ec.europa.eu/taxation_customs/taxation/other_taxes/financial_sector/index_en.htm. 
O.J.L 22, 25.1.2013, p.11. 

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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.  Non-
participating States’financial institutions will benefit from the enhanced cooperation, as they will be 
confronted  with  only  one  common  system  of  FTT  applicable  in  the  participating  Member  States 
instead of a multitude of systems. 

3.2. 

Subsidiarity and proportionality 

The harmonisation of legislation concerning the taxation of financial transactions necessary for the 
proper functioning of the internal market and to avoid distortions of competition, be it only among 
the participating Member States, can only be achieved through a Union act, i.e. by way of a uniform 
definition  of  the  essential  features  of  an  FTT.  The  common  rules  are  necessary  to  avoid  undue 
relocations of transactions and market participants and substitution of financial instruments.  

By  the  same  token,  a  uniform  definition  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. These findings remain valid in a 
context  of  enhanced  cooperation,  even  though  such  cooperation  implies  a  more  reduced 
geographical reach than a similar scheme adopted at the level of all 27 Member States. 

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 
participating Member States when it comes to the actual setting of the tax rates above the minimum. 
On  the  other  hand,  it  is  proposed  to  confer  delegated  powers  to  the  Commission  as  regards  the 
specification of registration, accounting, reporting and other obligations intended to ensure that FTT 
due to the tax authorities is effectively paid to them As regards uniform methods of collection of the 
FTT due, implementing powers conferred to the Commission are proposed. 

A common framework for an FTT therefore respects the subsidiarity and proportionality principle 
as  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, if necessary through enhanced cooperation. 

The  harmonisation  proposed,  in  the  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 and definitions) 

This  chapter  defines  the  subject  matter  of  this  proposed  Directive  containing  the  proposal  for 
implementation of the enhanced cooperation in the area of FTT. Furthermore, this chapter provides 
for definitions of the main terms used in this proposal. 

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3.3.2.  Chapter II (Scope of the common system of FTT) 

This  chapter  defines  the  essential  framework  of  the  proposed  common  system  of  FTT  under 
enhanced cooperation. 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  undertakings  for  collective  investment  in  transferable  securities  (UCITS)  and  alternative 
investment funds (AIF)13 and derivatives contracts. Furthermore, the scope of the tax is not limited 
to trade in organised markets, such as regulated markets, multilateral trading facilities or systematic 
internalisers,  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  party  concerned  assumes  the  risk  implied  by  a  given  financial  instrument 
("purchase and sale").  

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

Exchanges  of  financial  instruments  and  repurchase  and  reverse  repurchase  and  securities  lending 
and borrowing agreements are explicitly included into the scope of the tax. For reasons of avoiding 
tax  circumvention  exchanges  of  financial  instruments  are  considered  to  give  rise  to  two  financial 
transactions.  On  the  other  hand,  by  way  of  repurchase  and  reverse  repurchase  agreements  and 
securities lending and borrowing agreements, a financial instrument is put at the disposal of a given 
person for a defined period of time. All such agreements should therefore be considered as giving 
rise to one financial transaction only.  

Additionally,  in  order  to  prevent  tax  avoidance,  each  material  modification  of  a  taxable  financial 
transaction should be considered a new taxable financial transaction of the same type as the original 
transaction.  It  is  proposed  to  add  a  non-limitative  list  of  what  can  be  considered  a  material 
modification. 

Also,  where  a  derivatives  contract  results  in  a  supply  of  financial  instruments,  in  addition  to  the 
taxable derivatives contract, the supply of these financial instruments is also subject to tax, provided 
that all other conditions for taxation are fulfilled.  

For  the  financial  instruments  which  may  form  the  object  of  a  taxable  financial  transaction,  the 
relevant  regulatory  framework  at  EU  level  provides  a  clear,  comprehensive  and  accepted  set  of 
definitions14.  It  emerges  from  the  definitions  used  that  spot  currency  transactions  are  not  taxable 

13 

14 

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

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financial  transactions,  while  currency  derivative  contracts  are.  Derivative  contracts  relating  to 
commodities are also covered, while physical commodity transactions are not. 

Structured products, meaning tradable securities or other financial instruments offered by way of a 
securitisation  can  also  form  the  object  of  taxable  financial  transactions.  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 certain notes, warrants and certificates as 
well as banking securitisations which usually transfer a large part of 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 the underwriting risk.  

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  the  presence  of  financial  transactions  is  usually 
evident via respective entries in the books. The imposition of FTT should not negatively affect the 
refinancing  possibilities  of  financial  institutions  and  States,  nor  monetary  policies  in  general  or 
public  debt  management.  Therefore,  transactions  with  the  European  Central  Bank,  the  European 
Financial  Stability  Facility,  the  European  Stability  Mechanism,  the  European  Union  where  it 
exercises  the  function  of  management  of  its  assets,  of  balance  of  payment  loans  and  of  similar 
activities,  and  the  central  banks  of  Member  States  should  be  excluded  from  the  scope  of  the 
Directive.  

The provisions of Council Directive 2008/7/EC continue to be fully applicable. Article 5 (1)(e) and 
(2)  of  that  Directive  is  relevant  to  the  area  covered  by  the  present  Directive  and  prohibits  the 
imposition  of  any  tax  whatsoever  on  the  transactions  referred  to  in  its  terms,  subject  to  Article 
6(1)(a) of the same Directive. To the extent Directive 2008/7/EC thus prohibits or could prohibit the 
imposition  of  taxes  on  certain  transactions,  in  particular  financial  transactions  as  part  of 
restructuring operations or of the issue of securities as defined in this Directive, they should not be 
subject to FTT. The aim is to avoid any possible conflict with Directive 2008/7/EC, without it being 
necessary  to  ascertain  the  precise  limits  of  the  obligations  imposed  by  that  Directive.  Moreover, 
independently from the extent to which Directive 2008/7/EC prohibits taxation of the issuance of 
shares  and  units  of  collective  investment  undertakings  considerations  of  tax  neutrality  require  the 
single  treatment  of  issuances  by  all  these  undertakings.  The  redemption  of  shares  and  units  thus 
issued are however not in the nature of a primary market transaction and should thus be taxable. 

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  the  FTT.  This  is  the  case  for  the 
conclusion  of  insurance  contracts,  mortgage  lending,  consumer  credits,  enterprise  loans,  payment 
services  etc.  (though  the  subsequent  trading  of  these  via  structured  products  is  included).  Also, 
currency  transactions  on  spot  markets  are  outside  the  scope  of  the  FTT,  which  preserves  the  free 
movement of capital. However, derivatives contracts based on currency transactions are covered by 
the FTT since they are not as such currency transactions. 

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  undertakings, 
institutions,  bodies  or  persons  carrying  out  certain  financial  activities  with  a  significant  annual 

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average  value  of  financial  transactions  should  be  considered  as  financial  institutions.  The  present 
proposal sets the threshold at 50% of its overall average net annual turnover of the entity concerned. 

The proposed Directive provides for further technical details of the calculation of the value of the 
financial  transactions  and  the  average  of  values  referred  to  in  respect  of  entities  that  may  be 
regarded  as  financial  institutions  only  on  account  of  the  value  of  the  financial  transactions  they 
carry  out,  and  makes  provision  for  situations  where  such  entities  no  longer  qualify  as  financial 
institutions..  

Central  Counterparties  (CCPs),  Central  Securities  Depositories  (CSDs),  International  Central 
Securities Depositories (ICSDs) and Member States and public bodies entrusted with the function 
of managing public debt, when exercising that function are not considered financial institutions to 
the extent they are not engaged in trading activity in itself. They are also key for a more efficient 
and more transparent functioning of financial markets and for a proper management of public debt. 
However, because of their central role certain obligations relating to ensuring the payment of the tax 
to the tax authorities and to the verification of the payment should continue to apply.  

The territorial application of the proposed FTT and the participating Member States’ taxing rights 
are defined on the basis of the rules laid down in Article 4. This provision refers to the notion of 
“establishment”.  In  essence, it is based on the "residence principle" supplemented by  elements of 
the issuance principle with a view mainly to strengthen anti-relocation (details regarding this latter 
aspect are set out further below). 

In  order  for  a  financial  transaction  to  be  taxable  in  the  participating  Member  States,  one  of  the 
parties  to  the  transaction  needs  to  be  established  in  the  territory  of  a  participating  Member  State 
according to the criteria of Article 4. Taxation will take place in the participating 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 a party to the transaction.  

In case the different financial institutions, as parties to the transaction or acting in the name of such 
parties,  are  established  in  the  territory  of  different  participating  Member  States,  according  to  the 
criteria  of  Article  4,  each  of  these  different  Member  States  will  be  competent  to  subject  the 
transaction to tax at the rates it has set in accordance with this proposal. Where the establishments 
concerned  are  located  in  the  territory  of  a  State  which  is  not  a  participating  Member  State  the 
transaction is not subject to FTT in a participating Member State, unless one of the parties to the 
transaction is established in a participating Member State in which case the financial institution that 
is  not  established  in  a  participating  Member  State  will  also  be  deemed  to  be  established  in  that 
participating Member State and the transaction becomes taxable there.  

One particular change due to the new context of enhanced cooperation concerns what was Article 
3(1)(a)  of  the  initial  proposal.  Within  that  proposal,  the  reference  to  a  financial  institution 
“authorised” by a Member State covered headquarter authorisations and authorisations provided by 
the  Member  State  concerned  in  regard  to  transactions  operated  by  third-country  financial 
institutions  without  a  physical  presence  in  the  territory  of  that  Member  State.  In  the  former 
configuration, transactions may be covered, according to the case, by a “passport” foreseen in EU 
legislation.  The  only  “authorisation”  is  then  the  one  granted  to  the  headquarters  of  the  financial 
institution.  In  a  context  of  enhanced  cooperation,  a  new  configuration  may  raise,  namely  of 
institutions  with  headquarters  in  a  non-participating  Member  State  that  operate  on  the  basis  of  a 
“passport” in the FTT jurisdiction (cf. e.g. Article 31 of Directive 2004/39/EC). The latter situation 
should be assimilated to the situation of third country institutions operating on the basis of a specific 
authorisation provided by the Member State concerned by the transaction. 

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The residence principle is supplemented also by elements of the "issuance principle" as a last resort, 
in order to improve the resilience of the system against relocation. Indeed, by complementing the 
residence principle with the issuance principle, it will be less advantageous to relocate activities and 
establishments  outside  the  FTT  jurisdictions,  since  trading  in  the  financial  instruments  subject  to 
taxation under the latter principle and issued in the FTT jurisdictions will be taxable anyway. This 
applies where none of the parties to the transaction would have been “established” in a participating 
Member  State,  on  the  basis  of  the  criteria  set  out  in  the  Commission’s  initial  proposal  but  where 
such  parties  are  trading  in  financial  instruments  issued  in  that  Member  State.  This  concerns 
essentially shares, bonds and equivalent securities, money-market instruments, structured products, 
units  and  shares  in  collective  investment  undertakings  and  derivatives  traded  on  organised  trade 
venues or platforms. In the context of the issuance principle, which also underlies certain existing 
national financial sector taxes, the transaction is linked to the participating Member State in which 
the issuer is located. The persons involved in such transaction will be deemed to be established in 
that Member State because of this link, and the financial institution(s) concerned will have to pay 
FTT in that State.  

All the above mentioned criteria are subject to a general rule, regarding the case where the person 
liable to pay the tax proves that there is no link between the economic substance of the transaction 
and  the  territory  of  any  participating  Member  State. In that case, the financial institution or other 
person shall not be considered established within a participating Member State.  

All in all, through the connecting factors chosen in combination with the above mentioned general 
rule, it is ensured that taxation can only take place in the presence of a sufficient link between the 
transaction  and  the  territory  of  the  FTT  jurisdiction.  As  in  existing  EU  legislation  in  the  area  of 
indirect taxes, territoriality principles are fully respected. 

3.3.3.  Chapter III (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  transactions  in  derivatives  and  in  financial  instruments  other  than  derivatives  have  a  different 
nature and characteristics, they have to be associated to different taxable amounts.  

For  the  purchase  and  sale  of  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 
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. Such transactions 
between entities of a group are likely to involve transfers without consideration, while transfers for 
consideration correspond to the notions of "purchase" and "sale". 

For  the  purchase/sale,  transfer,  exchange,  conclusion  of  derivative  contracts,  and  material 
modifications thereof, the taxable amount of the FTT shall be the notional amount referred to in the 
derivatives contract at the time it is purchased/sold, transferred, exchanged, concluded or when the 
operation  concerned  is  materially  modified.  This  approach  would  allow  for  a  straightforward  and 
easy application of FTT on derivative contracts 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 contract as there would be no tax incentive for example to 

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enter into a contract on differences in prices or values only. Furthermore it implies the taxation at 
the  moment  of  the  purchase/sale,  transfer,  exchange,  conclusion  of  the  contract  or  material 
modification of the operation concerned, as compared to taxing cash-flows at different moments in 
time during the life cycle of the contract. 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 participating Member States in order to prevent fraud 
and evasion and a general anti-abuse rule is proposed (see also section 3.3.4). This rule could for 
example be applied 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  could  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 the participating 
Member State of assessment. 

Transactions  in  derivatives  and  transactions  in  other  financial  instruments  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.  

3.3.4.  Chapter IV (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 participating 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  of  the 
participating Member States in the territories of which these financial institutions are deemed to be 
established. However, in order to avoid a certain cascade of the tax, when a financial institution acts 
in the name or for the account of another financial institution, only that other financial institution 
should pay the tax. 

It is also proposed to ensure as far as possible that FTT is effectively paid. According to the terms 
of this proposal, therefore, in case the FTT due on account of a transaction has not been timely paid 
each party to that transaction should be held jointly and severally liable for the payment of the tax. 
Moreover, participating 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 territory of the participating Member States.  

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This proposal also provides for time limits for the payment of FTT to the accounts determined by 
the participating Member States. Most financial transactions are carried out by electronic means. In 
these cases, FTT should be paid immediately at the moment of chargeability. In other cases, the tax 
should be paid 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  from  the  moment  of  chargeability  can  be 
considered appropriate in this sense. 

The  participating  Member  States  should  be  obliged  to  take  appropriate  measures  for  registration, 
accounting,  reporting  and  other  obligations  for  the  FTT  to  be  levied  accurately  and  timely  and 
effectively paid to the tax authorities. In this regard, it is proposed to empower the Commission to 
provide  for  further  details.  This  is  necessary  in  order  to  ensure  harmonised  measures  reducing 
compliance  costs  for  operators  and  to  enable  speedy  technical  adaptations  whenever  they  are 
necessary.  In  this  context,  the  participating  Member  States  should  take  advantage  of  existing  and 
forthcoming  EU  legislation  on  financial  markets  that  includes  reporting  and  data  maintenance 
obligations with respect to financial transactions. 

The proposed Directive would also oblige Member States to take measures in order to prevent fraud 
and evasion.  

Furthermore, in order to address the risk of abuse which could undermine the proper operation of 
the common system, it is proposed to set out a number of details in the directive. Thus, the proposal 
contains  a  general  anti-abuse  rule,  based  on  the  similar  clause  included  in  the  Commission 
Recommendation of 6 December 2012 on aggressive tax planning15, as well as a provision based on 
the same principles but addressing the particular problems linked to depositary receipts and similar 
securities. 

In order to avoid complications in the collection of the tax through differing collection methods, and 
ensuing unnecessary compliance costs, the methods applied by the participating Member States for 
the collection of the FTT due should be uniform, to the extent necessary for those purposes. Such 
uniform methods would also contribute to equal treatment of all taxpayers. Therefore, the proposed 
Directive provides for an empowerment of the Commission to adopt implementing measures to this 
effect.  

In  order  to  ease  the  administration  of  the  tax,  the  participating  Member  States  could  introduce 
national  (publicly  accessible)  registries  for  the  FTT  entities.  In  practice,  they  could  make  use  of 
existing  codification,  for  instance  the  Business  Identification  Codes  (BIC/ISO  9362)  for  both 
financial and non-financial institutions, the Classification of Financial Instruments (CFI/ISO 10962) 
for financial instruments and the Market Identifier Code (MIC/ISO 10383) for the different markets. 

In  addition  to  discussions  on  the  definition  of  uniform  collection  methods  in  the  relevant 
Committee, the Commission might organise regular expert meetings with a view to discuss with the 
participating  Member  States  the  operation  of  the  Directive  once  adopted,  in  particular  ways  of 
ensuring  the  proper  payment  of  the  tax  and  the  verification  of  payment,  as  well  as  matters 
pertaining to the prevention of tax evasion, avoidance and abuse. 

The  draft  Directive  does  not  address  issues  of  administrative  cooperation  which  are  covered  in 
existing  instruments  relating  to  the  assessment  and  recovery  of  taxes,  in  particular  Directive 

15 

OJ L 338, 12.12.2012, p. 41. 

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2011/16/EU of the Council of 15 February on administrative cooperation in the field of taxation and 
repealing Directive 77/799/EEC16 (applicable as of 1 January 2013), Directive 2010/24/EU of the 
Council of 16 March 2010 concerning mutual assistance for the recovery of claims relating to taxes, 
duties and other measures17 (applicable as of 1 January 2012). The directive proposed here neither 
adds to those instruments, nor does it diminish their scope. They continue to apply to all taxes of 
any kind levied by or on behalf a Member State18, and this encompasses FTT as it does any other 
tax thus levied. These instruments apply to all Member States who should provide assistance within 
the limits and conditions thereof. Other instruments which are relevant in this context include the 
OECD  -  Council  of  Europe  Multilateral  Convention  on  Mutual  Administrative  Assistance  in  Tax 
Matters19. 

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

3.3.5.  Chapter V (Final provisions) 

It  follows  from  the  harmonisation  objective  of  this  proposal  that  the  participating  Member  States 
should  not  be  allowed  to  maintain  or  introduce  taxes  on  financial  transactions  as  defined  in  this 
proposal  other  than  the  FTT  object  of  the  proposed  Directive  or  VAT.  Indeed,  as  far  as  VAT  is 
concerned,  the  right  of  option  to  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 tax20 continues 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. 

It is proposed for the participating Member States to communicate to the Commission the text of the 
provisions  transposing  the  proposed  Directive  into  national  legal  provisions.  No  provision  of 
explanatory  documents  is  proposed  in  this  respect,  given  the  limited  number  of  articles  in  the 
proposal and ensuing obligations on Member States.  

4. 

BUDGETARY IMPLICATION  

Preliminary  estimates  indicate  that,  depending  on  market  reactions,  the  revenues  of  the  tax  could 
have been between EUR 30 and 35 billion on a yearly basis in the whole of participating Member 
States  in  case  the  original  proposal  for  EU27  had  been  applied  to  EU11.  However,  when  taking 
account of the net effects of the adjustments made as compared to the original proposal, notably (i) 
the issue of units and shares of UCITS and AIF is no longer considered not to be a primary market 
transaction, and (ii) the anti-relocation provisions of the residence principle as initially defined have 
been  strengthened  by  complementing  them  with  elements  of  the  issuance  principle,  preliminary 
estimates indicate that the revenues of the tax could be in the order of magnitude of EUR 31 billion 
annually. 

16 
17 
18 
19

20 

OJ L 64, 11.3.2011, p. 1. 
OJ L 84, 31.3.2010, p. 1. 
With certain exceptions in the case of Directive 2011/16/EU but which are no relevant here. 

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. 

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The Commission Proposal for a Council Decision on the system of own resources of the European 
Union of 29 June 201121, as amended on 9 November 201122, set out that part of receipts generated 
by  the  FTT  shall  constitute  an  own  resource  for  the  EU  Budget.  The  GNI-based  resource  drawn 
from the participating Member States would be reduced accordingly.  

The European Council of 7/8 February 2013 invited the participating Member States to examine if 
the FTT could become the base for a new own resource for the EU Budget. 

21 

22 

COM(2011) 510 final. 
http://ec.europa.eu/budget/library/biblio/documents/fin_fwk1420/proposal_council_own_resources_en.pdf 
COM(2011) 739 final. 
http://ec.europa.eu/budget/library/biblio/documents/fin_fwk1420/COM_2011_0739_EN.pdf 

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2013/0045 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

implementing enhanced cooperation in the area of financial transaction tax 

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  Council  Decision  2013/52/EU  of  22  January  2013  authorising  enhanced 
cooperation in the area of financial transaction tax1, 

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 Parliament2,  

Having regard to the opinion of the European Economic and Social Committee3,  

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

In 2011, the Commission took note of a debate on-going at all levels on additional taxation 
of  the  financial  sector.  The  debate  originates  from  the  desire  to  ensure  that  the  financial 
sector fairly and substantially contributes to 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. 

By  Decision  2013/52/EU  the  Council  authorised  enhanced  cooperation  between  Belgium, 
Germany,  Estonia,  Greece,  Spain,  France,  Italy,  Austria,  Portugal,  Slovenia  and  Slovakia 
(hereinafter "participating Member States") in the area of financial transaction tax (FTT). 

In  order  to  prevent  distortions  through  measures  taken  unilaterally  by  the  participating 
Member  States,  bearing  in  mind  the  extremely  high  mobility  of  most  of  the  relevant 
financial transactions, and thus to improve the proper functioning of the internal market, it is 
important that the basic features of a FTT in the participating Member States are harmonised 
at  Union  level.  Incentives  for  tax  arbitrage  between  the  participating  Member  States  and 

1 
2 
3 

OJ L 22, 25.1.2013, p. 11 
OJ C …, …, p.. . 
OJ C …, …, p. .. 

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(4) 

(5) 

(6) 

(7) 

allocation distortions between financial markets in those States, as well as possibilities for 
double or non-taxation should thereby be avoided. 

The  improvement  of  the  operation  of  the  internal  market,  in  particular  the  avoidance  of 
distortions between the participating Member States requires that a FTT applies to a broadly 
determined  range  of  financial  institutions  and  transactions,  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  of  all  derivative  contracts  and  to  material 
modifications of the operations concerned.  

In principle, each transfer agreed upon, of one or more financial instruments, is linked to a 
given transaction which in turn should be subject to FTT on account of such agreed transfer. 
Since  an  exchange  of  financial  instruments  gives  rise  to  two  such  transfers,  each  such 
exchange  should  be  considered  as  giving  rise  to  two  transactions,  so  as  to  avoid 
circumvention  of  the  tax.  By  way  of  repurchase  and  reverse  repurchase  and  securities 
lending and borrowing agreements, a financial instrument is put at the disposal of a given 
person  for  a  specified  period  of  time.  All  such  agreements,  as  well  as  their  material 
modification, should therefore be considered as giving rise to one transaction only. 

In  order  to  preserve  the  efficient  and  transparent  functioning  of  financial  markets  or  the 
public  debt  management,  it  is  necessary  to  exclude  certain  entities  from  the  scope  of  the 
FTT,  in  as  much  as  these  are  exercising  functions  which  are  not  considered  to  be  trading 
activity  in  itself  but  rather  facilitating  trade  or  protecting  the  management  of  public  debt. 
However,  entities  excluded  specifically  because  of  their  central  role  for  the  functioning  of 
financial markets or public debt management should be made subject to the rules that ensure 
the proper payment of the tax to the tax authorities and the verification of the payment.  

The imposition of FTT should not negatively affect the refinancing possibilities of financial 
institutions  and  States,  nor  monetary  policies  in  general.  Therefore,  transactions  with  the 
European  Central  Bank,  the  European  Financial  Stability  Facility,  the  European  Stability 
Mechanism,  the  European  Union  where  it  exercises  the  function  of  management  of  its 
assets,  of  balance  of  payment  loans  and  of  similar  activities,  and  the  central  banks  of 
Member States should not be subject to FTT. 

(8)  With  the  exception  of  the  conclusion  or  material  modification  of  derivative  contracts,  the 
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.  

(9) 

The  provisions  of  Council  Directive  2008/7/EC  of  12  February  2008  concerning  indirect 
taxes on the raising of capital4 continue to be fully applicable. Article 5(1)(e) and (2) of that 
Directive  is  relevant  to  the  area  covered  by  this  Directive  and  prohibits,  subject  to  Article 
6(1)(a) of that Directive, the imposition of any tax whatsoever on the transactions referred to 
in  its  provisions.  Transactions  in  respect  of  which  Directive  2008/7/EC  prohibits  or  could 
prohibit the imposition of taxes should therefore not be subject to FTT. Independently from 
the  extent  to  which  Directive  2008/7/EC  prohibits  taxation  of  the  issuance  of  shares  and 
units  collective  investment  undertakings,  considerations  of  tax  neutrality  require  a  single 
treatment  of  issuances  by  all  these  undertakings.  The  redemption  of  shares  and  units  thus 

4 

OJ L 46, 21.2.2008, p.11. 

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17 

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issued  are  however  not  in  the  nature  of  a  primary  market  transaction  and  should  thus  be 
taxable. 

(10)  The chargeability and taxable amount should be harmonised so as to avoid distortions in the 

internal market. 

(11)  The  moment  of  chargeability  should  not  be  unduly  delayed  and  should  coincide  with  the 

moment where the financial transaction occurs.  

(12) 

(13) 

(14) 

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  contracts  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 market price should be 
referred to as a fair reflection of the value of the transaction. Equally for reasons of ease of 
calculation,  where  derivatives  contracts  are  purchased/sold,  transferred,  exchanged, 
concluded or where these operations are materially modified, the notional amount referred to 
in the contract should be used.  

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  and  material 
modification of the operations concerned, on the one hand, and the purchase/sale, transfer, 
exchange, conclusion of derivatives contracts, and material modification of these operations 
on the other hand. 

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 own account or for the account of other persons.  

(15)  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. 
To  further  minimise  the  risk  of  relocation  of  transactions,  while  maintaining  a  single 
reference to “establishment” for ease of application, this principle should be supplemented 
by elements of the issuance principle. Thus, for transactions in certain financial instruments, 
the persons involved should be considered established in the participating Member State in 
which the instrument has been issued. 

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

(17) 

(18) 

(19) 

It  should  be  avoided  that  any  side  of  a  single  transaction  be  taxed  more  than  once. 
Therefore,  where  a  financial  institution  acts  in  the  name  or  for  the  account  of  another 
financial institution, only that other financial institution should pay the tax. 

In  order  for  the  FTT  to  be  levied  in  an  accurate  and  timely  manner,  the  participating 
Member States should be obliged to take the necessary measures.  

In order to prevent tax fraud and evasion the participating Member States should be obliged 
to adopt appropriate measures. 

EN 

18 

   EN 

(20) 

(21) 

In  order  to  prevent  tax  avoidance  and  abuse  through  artificial  schemes,  it  is  necessary  to 
provide for a general anti-abuse rule. A specific rule based on the same principles should be 
added  with  a  view  to  address  the  particular  problems  linked  to  depositary  receipts  and 
similar securities. 

In  order  to  allow  the  adoption  of  more  detailed  rules  in  certain  technical  areas,  regarding 
registration, accounting, reporting obligations and other obligations intended to ensure that 
FTT  due  to  the  tax  authorities  is  effectively  paid  to  the  tax  authorities,  and  their  timely 
adaptation  as  appropriate,  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. 

(22) 

In order to ensure uniform conditions for the implementation of this Directive, as regards the 
collection  of  the  tax  in  the  participating  Member  States,  implementing  powers  should  be 
conferred  on  the  Commission.  Those  powers  should  be  exercised  in  accordance  with 
Regulation  (EU)  No  182/2011  of  the  European  Parliament  and  of  the  Council  of  16 
February  2011  laying  down  the  rules  and  general  principles  concerning  mechanisms  for 
control by Member States of the Commission’s exercise of implementing powers.5 

(23)  Since market operators will need some time to adjust to the new rules, an appropriate period 
of  time  should  be  provided  for  between  the  adoption  of  the  national  rules  necessary  to 
comply with this Directive and the application of those rules. 

(24)  Since  the  objective  of  this  Directive,  namely  to  harmonise  the  essential  features  of  a  FTT 
within  the  participating  Member  States  at  Union  level,  cannot  be  sufficiently  achieved  by 
these Member States and can therefore, by reason of improving 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, 

HAS ADOPTED THIS DIRECTIVE: 

Chapter I  
Subject matter and definitions 

Article 1 
Subject matter 

1. 

2. 

5 

This Directive implements the  enhanced cooperation authorised by Decision 2013/52/EU 
by laying down provisions for a harmonised financial transaction tax (FTT). 

Participating Member States shall charge FTT in accordance with this Directive. 

OJ L 55, 28.2.2011, p. 13 

EN 

19 

   EN 

                                                 
Article 2 
Definitions  

1. 

(1) 

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

'Participating Member State' means a Member State which participates, at the time when 
FTT becomes chargeable pursuant to this Directive, in enhanced cooperation in the area of 
FTT by virtue of Decision 2013/52/EU, or by virtue of a decision adopted in accordance 
with the second or third subparagraph of Article 331(1) of the TFEU; 

(2) 

'Financial transaction' means any of the following: 

(a) 

the purchase and sale of a financial instrument before netting or settlement;  

(b) 

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 of derivatives contracts before netting or settlement; 

(d) 

an exchange of financial instruments; 

(3) 

(4) 

(5) 

(6) 

(7) 

(e) 

a  repurchase  agreement,  a  reverse  repurchase  agreement,  a  securities  lending  and 
borrowing agreement; 

'Financial  instruments'  means  financial  instruments  as  defined  Section  C  of  Annex  I  to 
Directive  2004/39/EC  of  the  European  Parliament  and  of  the  Council6,  and  structured 
products; 

'Derivatives  contract'  means  a  financial  instrument  as  defined  in  points  (4)  to  (10)  of 
Section C of Annex I to Directive 2004/39/EC, as implemented by Articles 38 and 39 of 
Commission Regulation (EC) No 1287/20067; 

'Repurchase agreement' and 'reverse repurchase agreement' means an agreement as defined 
in  Article  3(1)(m)  of  Directive  2006/49/EC  of  the  European  Parliament  and  of  the 
Council8; 

'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  of  the  Council9  or  by  way  of  equivalent  transactions  involving 
the transfer of risks other than credit risk;  

(8) 

'Financial institution' means any of the following: 

6 
7 
8 
9 

OJ L 145, 30.4.2004, p. 1. 
OJ L 241, 2.9.2006, p.1. 
OJ L 177, 30.6.2006, p. 201. 
OJ L 177, 30.6.2006, p. 1. 

EN 

20 

   EN 

                                                 
(a) 

an investment firm as defined in Article 4(1)(1) of Directive 2004/39/EC; 

(b) 

a  regulated  market  as  defined  in  Article  4(1)(14)  of  Directive  2004/39/EC  and  any 
other organised trade venue or platform; 

(c) 

a credit institution as defined in Article 4(1) of Directive 2006/48/EC; 

(d) 

(e) 

(f) 

(g) 

an  insurance  and  reinsurance  undertaking  as  defined  in  Article  13  of  Directive 
2009/138/EC of the European Parliament and the Council10; 

an  undertaking  for  collective  investments  in  transferable  securities  (UCITS)  as 
defined in Article 1(2) of Directive 2009/65/EC of the European Parliament and of 
the Council11 and a management company as defined in Article 2(1)(b) 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  of  the 
Council12, 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 of the European Parliament 
and of the Council13;  

(h) 

a  securitisation  special  purpose  entity  as  defined  in  Article  4(44)  of  Directive 
2006/48/EC; 

(i) 

(j) 

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

any  other  undertaking,  institution,  body  or  person  carrying  out  one  or  more  of  the 
following  activities,  in  case  the  average  annual  value  of  its  financial  transactions 
constitutes  more  than  fifty  per  cent  of  its  overall  average  net  annual  turnover,  as 
referred to in Article 28 of Council Directive 78/660/EEC14:  

(i) 

ii) 

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

trading  for  own  account  or  for  account  or  in  the  name  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); 

10 
11 
12 
13 
14 

OJ L 335, 17.12.2009, p. 1. 
OJ L 302, 17.11.2009, p. 32. 
OJ L 235, 23.9.2003, p. 10. 
OJ L 174, 1.7.2011, p.1. 
OJ L 222, 14.8.1978, p. 11. 

EN 

21 

   EN 

                                                 
(9) 

(10) 

(11) 

(12) 

2. 

'Central Counter Party' (CCP) means a CCP as defined in Article 2(1) of Regulation (EU) 
No 648/2012 of the European Parliament and of the Council15; 

'Netting'  means  netting  as  defined  in  Article  2(k)  of  Directive  98/26/EC  of  the  European 
Parliament and of the Council16; 

'A  financial  instrument  referred  to  in  Section  C  of  Annex  I  to  Directive  2004/39/EC  and 
structured products issued within the territory of a participating Member State' means such 
a financial instrument that is issued by a person who has its registered seat or, in case of a 
natural  person,  its  permanent  address  or,  if  no  permanent  address  can  be  ascertained,  its 
usual residence in that State;  

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

Each of the operations referred to in points (a), (b), (c) and (e) of paragraph 1(2) shall be 
considered  to  give  rise  to  a  single  financial  transaction.  Each  exchange  as  referred  to  in 
point  (d)  thereof  shall  be  considered  to  give  rise  to  two  financial  transactions.  Each 
material modification of an operation as referred to in points (a) to (e) of paragraph 1(2) 
shall  be  considered  to  be  a  new  operation  of  the  same  type  as  the  original  operation.  A 
modification is considered to be material in particular where it involves a substitution of at 
least one party, in case the object or scope of the operation, including its temporal scope, or 
the  consideration  agreed  upon  is  altered,  or  where  the  original  operation  would  have 
attracted a higher tax had it been concluded as modified. 

3. 

For the purposes of point (8)(j) of paragraph 1: 

(a) 

(b) 

(c) 

the average annual value referred to in that point shall be calculated either over the 
three preceding calendar years or, in the case of a shorter period of previous activity, 
over that shorter period;  

the value of each transaction referred to in Article 6 shall be the taxable amount as 
defined in that Article;  

the  value  of  each  transaction  referred  to  in  Article  7  shall  be  ten  per  cent  of  the 
taxable amount as defined in that Article; 

(d)  where the average annual value of financial transactions in two consecutive calendar 
years  does  not  exceed  fifty  per  cent  of  the  overall  average  net  annual  turnover,  as 
defined in Article 28 of Directive 78/660/EEC, the undertaking, institution, body or 
person concerned shall be entitled, upon request, to be considered as not being or no 
longer being a financial institution. 

15 
16 

OJ L 201, 27.7.2012, p.1. 
OJ L 166, 11.6.1998, p. 45. 

EN 

22 

   EN 

                                                 
Chapter II 
Scope of the common system of FTT 

Article 3 
Scope 

1. 

2. 

3. 

4. 

This  Directive  shall  apply  to  all  financial  transactions,  on  the  condition  that  at  least  one 
party to the transaction is established in the territory of a participating Member State and 
that  a  financial  institution  established  in  the  territory  of  a  participating  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. 

This Directive, with the exception of paragraphs 3 and 4 of Article 10 and paragraphs 1 to 
4 of Article 11, shall not apply to the following entities: 

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

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

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

(c)  Member States, including public bodies entrusted with the function of managing the 

public debt, when exercising that function.  

Where an entity is not taxable pursuant to paragraph 2, this shall not preclude the taxability 
of its counterparty. 

This Directive shall not apply to the following transactions: 

(a)  primary  market  transactions  referred  to  in  Article  5(c)  of  Regulation  (EC)  No 
1287/2006,  including  the  activity  of  underwriting  and  subsequent  allocation  of 
financial instruments in the framework of their issue; 

(b) 

transactions with the central banks of Member States; 

(c) 

transactions with the European Central Bank; 

(d) 

transactions with the European Financial Stability Facility and the European Stability 
Mechanism,  transactions  with  the  European  Union  related  to  financial  assistance 
made  available  under  Article  143  of  the  TFEU  and  to  financial  assistance  made 
available  under  Article  122(2)  of  the  TFEU,  as  well  as  transactions  with  the 
European  Union  and  the  European  Atomic  Energy  Community  related  to  the 
management of their assets; 

(e)  without  prejudice  to  point  (c)  and  (d),  transactions  with  the  European  Union,  the 
European  Atomic  Energy  Community,  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  and  under  the  conditions  of  that  Protocol,  the  headquarter 
agreements  or  any  other  agreements  concluded  for  the  implementation  of  the 
Protocol; 

EN 

23 

   EN 

(f) 

transactions with international organisations or bodies, other than those referred to in 
points (c), (d) and (e), 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;  

(g) 

transactions carried out as part of restructuring operations referred to in Article 4 of 
Council Directive 2008/7/EC17. 

Article 4 
Establishment 

1. 

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

(a) 

(b) 

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

it is authorised or otherwise entitled to operate, from abroad, as financial institution 
in regard to the territory of that Member State, in respect of transactions covered by 
such authorisation or entitlement; 

(c) 

it has its registered seat within that Member State; 

(d) 

(e) 

(f) 

(g) 

its  permanent  address  or,  if  no  permanent  address  can  be  ascertained,  its  usual 
residence is located in that Member State;  

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), 
(d) or (e), or with a party established in the territory of that Member State and which 
is not a financial institution; 

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  in  a 
structured  product  or  one  of  the  financial  instruments  referred  to  in  Section  C  of 
Annex  I  of  Directive  2004/39/EC  issued  within  the  territory  of  that  Member  State, 
with  the  exception  of  instruments  referred  to  in  points  (4)  to  (10)  of  that  Section 
which are not traded on an organised platform. 

2. 

A  person  which  is  not  a  financial  institution  shall  be  deemed  to  be  established  within  a 
participating Member State where any of the following conditions is fulfilled:  

(a) 

its  registered  seat  or,  in  case  of  a  natural  person,  its  permanent  address  or,  if  no 
permanent address can be ascertained, its usual residence is located in that State;  

17 

OJ L OJ L 46, 21.2.2008, p.11. 

EN 

24 

   EN 

                                                 
(b) 

(c) 

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

it  is  party  to  a  financial  transaction  in  a  structured  product  or  one  of  the  financial 
instruments referred to Section C of Annex I to Directive 2004/39/EC issued within 
the  territory  of  that  Member  State,  with  the  exception  of  instruments  referred  to  in 
points (4) to (10) of that Section which are not traded on an organised platform. 

Notwithstanding  paragraphs  1  and  2,  a  financial  institution  or  a  person  which  is  not  a 
financial  institution  shall  not  be  deemed  to  be  established  within  the  meaning  of  those 
paragraphs,  where  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  participating 
Member State. 

Where  more  than  one  of  the  conditions  in  the  lists  set  out  in  paragraphs  1  and  2 
respectively is fulfilled, the first condition fulfilled from the start of the list in descending 
order shall be relevant for determining the participating Member State of establishment. 

Chapter III  
Chargeability, taxable amount and rates of the common FTT 

Article 5 
Chargeability of FTT 

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

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

Article 6 
Taxable amount of the FTT in the case of financial transactions other than those related to 
derivatives contracts 

In the case of financial transactions other than those referred to in point 2(c) of Article 2(1) 
and,  in  respect  of  derivative  contracts,  in  points  2(a),  2(b)  and  2(d)  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 point 2(b) of Article 2(1). 

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

3. 

4. 

1. 

2. 

1. 

2. 

3. 

EN 

25 

   EN 

Article 7 
Taxable amount in the case of financial transactions related to derivatives contracts 

In  the  case  of  financial  transactions  referred  to  in  point  2(c)  of  Article  2(1)  and,  in  respect  of 
derivative  contracts,  in  points  2(a),  2(b)  and  2(d)  of  Article  2(1),  the  taxable  amount  of  the  FTT 
shall  be  the  notional  amount  referred  to  in  the  derivatives  contract  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 8 
Common provisions on taxable amount 

For the purposes of Articles 6 and 7, where the value relevant for the determination of the taxable 
amount  is  expressed,  in  whole  or  in  part,  in  a  currency  other  than  that  of  the  taxing  participating 
Member State, the applicable exchange rate shall be the latest selling rate recorded, at the time the 
FTT becomes chargeable, on the most representative exchange market of the participating 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 9 
Application, structure and level of rates 

1. 

2. 

The participating 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 participating Member State as a percentage of the taxable 
amount. 

Those rates shall not be lower than:  

(a)  0.1% in respect of the financial transactions referred to in Article 6;  

(b)  0.01% in respect of financial transactions referred to in Article 7. 

3. 

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

Chapter IV 
Payment of the common FTT, related obligations and prevention of 
evasion, avoidance and abuse 

Article 10 
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:  

EN 

26 

   EN 

(a) 

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

(b) 

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

(c) 

the transaction has been carried out on its account. 

The  FTT  shall  be  payable  to  the  tax  authorities  of  the  participating  Member  State  in  the 
territory of which the financial institution is deemed to be established. 

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. 

Where  the  tax  due  has  not  been  paid  within  the  time  limit  set  out  in  Article  11(5),  each 
party to a transaction, including persons other than financial institutions shall be jointly and 
severally liable for the payment of the tax due by a financial institution on account of that 
transaction. 

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

Article 11 
Provisions relating to time limits for the payment of FTT, to obligations intended to ensure 
payment, to the verification of payment 

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

The Commission may,  in  accordance with Article 16 adopt delegated acts specifying the 
measures to be taken pursuant to paragraph 1 by the participating Member States. 

The  participating  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 
rate.  
including 

transactions 

value 

taxed 

each 

total 

the 

the 

of 

at 

The  FTT  return  shall  be  submitted  by  the  tenth  day  of  the  month  following  the  month 
during which the FTT became chargeable. 

The participating Member States shall ensure that financial institutions keep at the disposal 
of  the  tax  authorities,  for  at  least  five  years,  the  relevant  data  relating  to  all  financial 
transactions  which  they  have  carried  out,  whether  in  their  own  name  or  in  the  name  of 
the  account  of  another  person. 
another  person,  for 

their  own  account  or  for 

In specifying that obligation they shall take account, where applicable, of obligations they 
have  already  imposed  on  financial  institutions  in  view  of  Article  25(2)  of  Directive 
2004/39/EC. 

2. 

3. 

4. 

1. 

2. 

3. 

4. 

5. 

The  participating  Member  States  shall  ensure  that  any  FTT  due  is  paid  to  the  accounts 
determined by the participating Member States at the following points in time: 

EN 

27 

   EN 

 
 
(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. 

The  Commission  may  adopt  implementing  acts  providing  for  uniform  methods  of 
collection of the FTT  due. Those implementing acts shall be adopted in accordance with 
the examination procedure referred to in Article 18(2). 

6. 

The participating Member States shall ensure that the tax authorities verify whether the tax 
has been correctly paid.  

Article 12 
Prevention of fraud and evasion 

The participating Member States shall adopt measures to prevent tax fraud and evasion. 

Article 13 
General anti-abuse rule 

1. 

2. 

3. 

An  artificial  arrangement  or  an  artificial  series  of  arrangements  which  has  been  put  into 
place  for  the  essential  purpose  of  avoiding  taxation  and  leads  to  a  tax  benefit  shall  be 
ignored.  Participating  Member  States  shall  treat  these  arrangements  for  tax  purposes  by 
reference to their economic substance. 

For  the  purposes  of  paragraph  1  an  arrangement  means  any  transaction,  scheme,  action, 
operation,  agreement,  grant,  understanding,  promise,  undertaking  or  event.  An 
arrangement may comprise more than one step or part. 

For  the  purposes  of  paragraph  1  an  arrangement  or  a  series  of  arrangements  is  artificial 
where it lacks commercial substance. In determining whether the arrangement or series of 
arrangements  is  artificial,  participating  Member  States  shall  consider,  in  particular, 
whether they involve one or more of the following situations: 

(a) 

(b) 

(c) 

the legal characterisation of the individual steps which an arrangement consists of is 
inconsistent with the legal substance of the arrangement as a whole; 

the arrangement or series of arrangements is carried out in a manner which would not 
ordinarily be employed in what is expected to be a reasonable business conduct; 

the arrangement or series of arrangements includes elements which have the effect of 
offsetting or cancelling each other; 

(d) 

transactions concluded are circular in nature; 

(e) 

the arrangement or series of arrangements results in a significant tax benefit but this 
is not reflected in the business risks undertaken by the taxpayer or its cash flows. 

4. 

For the purposes of paragraph 1, the purpose of an arrangement or series of arrangements 
consists in avoiding taxation where, regardless of any subjective intentions of the taxpayer, 
it defeats the object, spirit and purpose of the tax provisions that would otherwise apply. 

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5. 

6. 

1. 

2. 

3. 

For the purposes of paragraph 1, a given purpose is to be considered essential where any 
other  purpose  that  is  or  could  be  attributed  to  the  arrangement  or  series  of  arrangements 
appears at most negligible, in view of all the circumstances of the case. 

In determining whether an arrangement or series of arrangements has led to a tax benefit as 
referred  to  in  paragraph  1,  participating  Member  States  shall  compare  the  amount  of  tax 
due by a taxpayer, having regard to those arrangement(s), with the amount that the same 
taxpayer would owe under the same circumstances in the absence of the arrangement(s).  

Article 14 
Abuse in the case of depositary receipts and similar securities 

Without  prejudice  to  Article  13,  a  depositary  receipt  or  similar  security  issued  with  the 
essential  purpose  of  avoiding  tax  on  transactions  in  the  underlying  security  issued  in  a 
participating Member State shall be considered issued in that participating Member State, 
in case a tax benefit would otherwise arise. 

For the purposes of paragraph 1, paragraphs 4, 5 and 6 of Article 13 shall apply. 

In applying paragraph 1, regard shall be had to the extent to which trade in the depositary 
receipt  or  similar  security  has  replaced  trade  in  the  underlying  security.  Where  such 
replacement  has  occurred  to  a  significant  extent,  it  shall  be  for  the  person  liable  for 
payment  of  FTT  to  demonstrate  that  the  depositary  receipt  or  similar  security  was  not 
issued with the essential purpose of avoiding tax on transactions in the underlying security. 

Chapter V 
Final provisions 

Article 15 
Other taxes on financial transactions 

The  participating  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/EC18. 

Article 16 
Exercise of the delegation 

1. 

2. 

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

The  delegation  of  powers  referred  to  in  Article  11(2)  shall  be  conferred  for  an 
indeterminate period of time from the date referred to in Article 19.  

18 

OJ L 347, 11.12.2006, p. 1. 

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3. 

4. 

5. 

The  delegation  of  power  referred  to  in  Article  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 Article 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 17 
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 18 
Committee procedure 

1. 

2. 

The  Commission  shall  be  assisted  by  a  committee.  That  committee  shall  be  a  committee 
within the meaning of Regulation (EU) No 182/2011 

Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall 
apply. 

Article19 
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.  

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. 

Article20 
Transposition  

1. 

The  participating  Member  States  shall  adopt  and  publish,  by  30  September  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.  

They shall apply those provisions from 1 January 2014.  

When  the  participating  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 

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official publication. The participating Member States shall determine how such reference is 
to be made. 

2. 

The  participating  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 21 
Entry into force 

Article 22 
Addressees 

This Directive is addressed to the participating Member States. 

Done at Brussels,  

For the Council 
The President 

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ANNEX  

LEGISLATIVE FINANCIAL STATEMENT  

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Council Directive implementing enhanced cooperation in the area of financial transaction tax  

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 and substantial 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 transactions which do not enhance welfare or the efficiency 
of financial markets 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 

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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  if  necessary  through  enhanced 
cooperation. 

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.  Levying  FTT  would  facilitate  efforts  of 
budgetary  consolidation  in  the  participating  Member  States.  Moreover,  the  Commission  has 
proposed to use part of the proceeds of the FTT as a future own resource – if they were to be used 
for  financing  EU  budget,  the  participating  Member  States  would  see  their  GNI-based  national 
contributions reduced. 

1.6. 

Duration and financial impact  

Proposal of unlimited duration 

1.7.  Management method(s) envisaged 

N/A. 

2. 

MANAGEMENT MEASURES 

2.1.  Monitoring and reporting rules  

Participating 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 participating Member States. 

2.2.  Management and control system  

2.2.1.  Risk(s) identified 

1. Delays in the transposition of the Directive at participating 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, 

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avoidance and abuse: delegated acts and administrative cooperation in tax matters. 

The  risks  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. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

3.1. 

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. 

Budget line 

Type of 
expenditure 

Contribution  

Heading of 
multiannual 
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 

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. 

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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 

Payments 

(cid:121) TOTAL operational 
appropriations  

Commitments 

Payments 

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

(3) 

=1+1a 
+3 

=2+2a 

+3 

(4) 

(5) 

(6) 

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 

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 

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: 

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. 

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(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 

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: 

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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. 

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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 total issue of a common 
system of 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 among others 
on anti-avoidance/anti-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. 

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). 

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3.2.5.  Third-party contributions  

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

3.3. 

Estimated impact on revenue  

–  X  Proposal/initiative as such has no financial impact on revenue. However, if parts of 
the proceeds of the FTT were to be used as an own resource, thus reducing the residual 
GNI-based own resource drawn from the participating Member States, the composition 
of the revenue sources would be impacted. 

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