CELEX: 51976PC0124
Language: en
Date: 1976-03-31
Title: PROPOSAL FOR A COUNCIL DIRECTIVE CONCERNING INDIRECT TAXES ON TRANSACTIONS IN SECURITIES

14. 6. 76                              Official Journal of the European Communities                           N o C 133/1
                                                              II
                                                      (Preparatory Acts)
                                                 COMMISSION
              Proposal for a Council Directive concerning indirect taxes on transactions in securities
                              (Submitted by the Commission to the Council on 2 April 1976)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                          Whereas it is advisable to continue in this direction
                                                                  by similarly harmonizing indirect taxes on trans-
                                                                  actions in securities; whereas these taxes as at present
Having regard to the Treaty establishing the                      levied by Member States often give rise, as between
European Economic Community, and in particular                    those States, to double taxation, discrimination and
Articles 99 and 100 thereof,                                      other differences of a nature such as to distort the
                                                                  normal flow of capital;
Having regard to the proposal from the Commission,                Whereas the abolition of indirect taxes on trans-
                                                                  actions in securities would have been the most
Having regard to the          opinion    of   the European        desirable means of eliminating such disparities with
Parliament,                                                       regard to the proper functioning of the capital market
                                                                  but cannot be contemplated at the present time in
                                                                  view of the budgetary requirements of Member
Having regard to the opinion of the Economic and                  States;
Social Committee,
                                                                  Whereas, with a view to attaining in substance the
Whereas the movement of capital within the Com-                   above objectives, it is necessary to establish conver-
munity is hampered by the differences existing be-                gent structures in Member States for the admini-
tween the laws in force in the Member States with                 stration of these taxes in order to ensure, in respect
regard to taxes on capital movements; whereas, in                 of intra-Community transactions, a demarcation of
order to achieve free movement of such capital, it is,            the powers of taxation between the Member States
therefore, essential that these laws be harmonized so             and, as far as possible, to avoid double taxation;
as to eliminate the major disparities;
                                                                  Whereas Member States which so desire should, none
Whereas, in order to attain this objective, the Council           the less, remain free to abolish or not t o introduce
adopted, in 1969, a Directive concerning indirect                 such taxes in their legislation;
taxes on the raising of capital (1), which abolishes
stamp duty on securities and harmonizes as between                Whereas, on account of the technical difficulties and
Member States the duty on contributions to capital                repercussions which could ensue in the United King-
companies; whereas, in 1973, it also adopted a Direc-             dom and Ireland from a substantial change in the
tive fixing common rates of capital duty which                    system of control over securities and companies, it
entered into force on 1 January 1976 (2);                         seems desirable that the said States should be permit-
                                                                  ted to derogate, in part and under certain circum-
                                                                  stances, from the system provided for in this Directive
 (!) OJ N o L 249, 3. 10. 1969, p. 25.                            in respect of transactions in registered securities
 (2) OJ N o L 103, 18. 4. 1973, p. 15.                             registered in the United Kingdom or in Ireland;
 ---pagebreak---  No C 133/2                         Official Journal of the European Communities                                    14. 6. 76
Whereas, for economic reasons, a number of common               tered security issued in the United Kingdom or in
exemptions should be laid down; whereas, among                  Ireland, registers in either of the two countries his
the measures to facilitate the eventual abolition of            title to the securities specified in the certificate.
these taxes, it would appear advisable to permit
Member States to maintain the exemptions applicable
in each of them on the date of entry into force of the          3. Should it be found that application of paragraph 1
Directive;                                                      leads to diversions in transactions on the securities
                                                                market, the Council, on a proposal from the Com-
                                                                mission, shall take a decision on appropriate
Whereas, with regard to rates, it would appear that             measures by a qualified majority within six months.
disturbances on the capital market could be ad-
equately averted by imposing maximum rates of tax,
since this would permit Member States which so wish                                       Article 4
to obtain a reasonable level of revenue from this tax,
whilst leaving open the possibility of applying lower
rates,                                                          1. The Member States shald take the necessary steps
                                                                to exempt from the tax the following transactions:
                                                                (a) the issue of securities, and the first acquisition of
                                                                     securities immediately consequent upon such
                                                                     issues;
 HAS ADOPTED THIS DIRECTIVE:
                                                                (b) the first assignment by members of issuing
                                                                     consortia who have acquired securities with a
                                                                     firm option, and the 'first acquisition of securities
                         Article 1                                   corresponding to that assignment;
                                                                (c) the disposal and the acquisition of bonds with
Member States which impose a tax on transactions                     a maximum length, at the date of issue, of five
in securities shall levy it in accordance with this                  years;
Directive.
                                                                (d) acquisitions by the issuer of his own bonds for
                                                                     redemption.
                         Article 2
                                                               2. Transactions involving one or more professional
                                                               intermediaries shall be liable to the tax only in respect
1. For the purposes of this Directive, a taxable               of the operations of the transferors and the trans-
transaction is the disposal or the acquisition of              ferees. The Member States may, however, levy the
securities for valuable consideration, where the               tax on transactions carried out by professional inter-
transaction is concluded in a Member State or is               mediaries for their own account, with the exception
concluded in a non^member country by a resident                of transactions carried out by collective investment
of a Member State. Each disposal or acquisition of             undertakings.
securities constitutes a separate taxable transaction.
                                                               3. Without prejudice to subsequent Community
2. Collection of the tax may be deferred for not               provisions, Member States may also retain, subject
more than four months from the conclusion of the               to the application of paragraphs 1 and 2 above and
transaction.                                                   of Article 9, exemptions more extensive than those
                                                               specified in paragraph 1 or other exemptions, whether
                                                               such exemptions are specified in national legislation
                        Article 3                              or result from a more limited field of application of
                                                               the tax than is established by Article 2 above, on
                                                               condition that such exemptions apply on the date of
1. Notwithstanding Articles 2 and 5, the United                entry into force of this Directive. Member States
Kingdom and Ireland may regard as a single taxable             shall notify the Commission thereof not later than
transaction the disposal and acquisition of registered         one month after entry into force of the Directive.
securities registered in the United Kingdom or in
Ireland.
                                                               4. Where a Member State intends to introduce new
                                                               exemptions, it shall so inform the Commission in
2. The tax shall not be levied in the United Kingdom           good time and in writing. The Commission shall
or in Ireland where a resident of a Member State               consult the other Member States and take a decision
who has acquired a certificate representing a regis-           on the matter. The Member State concerned may
 ---pagebreak---   14. 6. 76                            Official Journal of the European Communities                             No C 133/3
 only implement the new exemptions after receipt of                    which he has the closest economic and social ties
 a favourable Commission decision or, in the absence                   (principal place of residence);
 of a Commission decision, within six months of the
 date of notification to the Commission.                          (b) if a person has no permanent place of residence
                                                                      in any Member State, he shall be treated as
                                                                      resident in the Member State in which he stays
                          Article 5                                   habitually;
                                                                  (c) if, applying rule (a), the principal place of
 The Member States' powers of taxation shall be
                                                                      residence cannot be determined and if, applying
 determined as follows:
                                                                      rule (b), the person is found to stay habitually in
 1. Where the professional intermediaries intervening                 two or more Member States, he shall be deemed
 in a transaction reside in Member States which apply                 to reside in that Member State of which he is also
 the tax:                                                             a national;
 — the tax on the disposal shall be payable in the                (d) if he is a national of two or more Member States,
     Member State in which the professional inter-                    or if he is not a national of any Member State,
     mediary acting for the transferor resides and the                the competent authorities of the Member States
      tax on the acquisition shall be paid in the                     shall settle the question by agreement.
     Member States in which the professional inter-
      mediary acting for the transferee resides.
                                                                 2. A person other than a natural person or profes-
                                                                  sional intermediary shall be deemed to reside in a
2. Where no professional intermediary intervenes or
                                                                 Member State when he acts as a transferor or trans-
where the intervening professional intermediaries
                                                                 feree of securities and when, according to the
reside in non-member countries or in Member States
                                                                 circumstances, either the effective management
 that do not apply the tax:
                                                                 control, the registered office or a permanent estab-
 (a) where both parties to the transaction reside in a           lishment is situated in that Member State.
     Member State that applies the tax:
     — the tax on the disposal shall be payable in the           3. A professional intermediary shall be deemed to
          Member State in which the transferor resides           reside in the Member State in which he has his
          and the tax on the acquisition in the Member           permanent establishment. A professional intermediary
          State in which the transferee resides;                 who has permanent establishments in two or more
                                                                 Member States shall, for the purposes of Article 5, be
 (b) where one of the parties to the transaction resides
                                                                 deemed to reside in the Member State in which the
     in a non-member country or in a Member State
                                                                 permanent establishment acting for the transferor or
     that does not apply the tax:
                                                                 for the transferee of the securities is situated.
     — the tax on the disposal or the tax on the
          acquisition shall be payable in the Member
          State in which the transferor or the transferee
                                                                                           Article 7
          resides;
(c) where both parties to the transaction reside in a            1. The tax shall be assessed on the agreed price.
     non-member country or in a Member State that                Where no price has been agreed or where the agreed
     does not apply the tax:                                     price differs from the actual value of the securities
     — the tax on the disposal and the tax on the                concerned, Member States may assess the tax on this
          acquisition shall be payable in the Member             value or on the average price of the securities.
          State in which the transaction is concluded.
                                                                 2. Interest on fixed-income securities which has
                                                                 accrued between the last coupon payment and the
                          Article 6                              date of a transaction, and expenses incidental to a
                                                                 transaction, such as brokerage of intermediaries,
1. The question whether a natural person other than              commission and the tax on the transaction itself, shall
a professional intermediary is resident in a Member              be excluded from the basis of assessment.
State shall be determined in accordance with the
following rules, which shall be applied in the order
in which they are listed:                                                                 Article 8
(a) a person shall be treated as resident in the
     Member State in which he has a permanent place              1. The rate of the tax shall not exceed:
     of residence. If he has a permanent place of
                                                                 (a) l-5°/oo for bonds;
     residence in two or more Member States, he shall
     be deemed to reside in that Member State with               (b) 3°/oo for other securities.
 ---pagebreak--- No C 133/4                             Official Journal of the European Communities                                14. 6. 76
Within these limits, the rate applicable to transactions                 persons. In this case, transfer duties shall apply
made on account in the bonds mentioned at (a) and                        only in respect of the value of the immovable
in the other securities mentioned at (b) may differ                      property, such value being determined in accord-
from that applicable to cash transactions.                               ance with national legislation;
                                                                     (c) value added tax applicable to interests or giving
2. In the case of transactions in the registered                         the holder thereof de jure or de facto rights of
securities referred to in Article 3 (1), the rate of the                 ownership or possession over immovable property
tax shall be twice that applied in accordance with                       or part thereof;
paragraph 1.
                                                                     (d) transfer duties on transactions in securities
                                                                         effected for a consideration other than their
                           Article 9                                     market value.
Member States shall refrain from all discriminatory                                         Article 11
treatment based on the residence of the issuer of the
securities or on the residence of those involved in the
transaction.                                                         Member States shall bring into force such provisions
                                                                     by way of laws, regulations or administrative action
                                                                     as may be necessary to comply with the provisions
                          Article 10                                 of this Directive at the latest by 1 January of the
                                                                     second year following that of its adoption.
 1. No form of tax assessed on the basis of the value
of the security involved in the transaction, whether                                        Article 12
or not charged at a flat rate, other than the tax
provided for in this Directive, shall be charged on                  Member States shall ensure that the texts of the main
transactions in securities.                                          provisions of internal law which they subsequently
                                                                     adopt in the field covered by this Directive are for-
2. Notwithstanding paragraph 1, Member States                        warded to the Commission.
may charge:
 (a) capital duty, as defined by Council Directive 69/                                      Article 13
     335/EEC of 17 July 1969 (*);
 (b) transfer duties on immovable property where, as                 So that the relevant conclusions can be drawn for
     a result of transactions in shares in companies,                further harmonization of taxes on transactions in
     funds, associations or other legal persons whose                securities, the Commission shall submit a report to
     assets consist in whole or in part of immovable                 the Council, every two years after the application of
     property situated in their territory, the purchaser             the Directive by Member States, on subsequent
     acquires all the assets or a position by virtue of              developments in the field covered by this Directive.
     which he is able to exercise control over these
     companies, funds, association or other legal
                                                                                            Article 14
 (!) OJ N o L 249, 3. 10. 1969, p. 25.                               This Directive is addressed to the Member States.
                                                             ANNEX
                                                            Definitions
                I. For the purpose of this Directive, the following shall be considered to be securities:
                   1. shares and other stocks in the following 'capital companies':
                       (a) companies under Belgian, Danish, German, French, Irish, Italian, Luxembourg,
                           Netherlands and United Kingdom law known respectively as:
 ---pagebreak--- 14. 6. 76                            Official Journal of the European Communities                              No C 133/5
                       — societe      anonyme/naamloze      vennootschap,    aktieselskab, Aktiengesellschaft,
                            societe anonyme, companies incorporated with limited liability (excluding private
                            limited companies), societa per azioni, societe anonyme, naamloze vennootschap,
                            companies incorporated with limited liability (excluding private limited com-
                            panies);
                       — societe en commandite par actions/commanditaire vennootschap op aandelen,
                            kommandit-aktieselskab, Kommanditgesellschaft auf Aktien, societe en comman-
                            dite par actions, societa in accomandita per azioni, societe en commandite par
                            actions, commanditaire vennootschap op aandelen;
                   (b) any company, firm, association or legal person the shares in whose capital or assets
                        can be dealt in on a stock exchange;
                   (c) any company, firm, association or legal person operating for profit, whose members
                        have the right to dispose of their shares to third parties without prior authorization
                       and are only responsible for the debts of the company, firm, association or legal
                       person to the extent of their shares;
               2. bonds, including convertible and exchangeable bonds (i.e. securities issued to represent
                   a loan and transferable by the forms of commercial law);
               3. shares or units in collective investment undertakings;
               4. subscription rights and similar securities;
               5. certificates representing such securities;
               6. letters of allotment.
               whether or not issued in a Member State, whether registered or bearer securities, whether
               or not quoted on a stock exchange.
           II. For the purpose of this Directive, the following may be considered to be securities:
                1. shares in societe de personnes a responsabilite limitee/personenvennootschap met be-
                   perkte aansprakelijkheid, Gesellschaft mit beschrankter Haftung, societe a responsabilite
                   limitee, private limited companies, societa a responsabilita limitata, societe a responsa-
                   bilite limitee, private limited companies;
               2.. loan participations forming part of a global loan which are transferable;
               3. securities or shares in any company, firm, association or legal person operating for
                   profit other than those specified in definitions I and II, 1 and 2 above, where in a
                   Member State they are considered to be 'capital companies'.
          III. For the purposes of this Directive, a taxable transaction is concluded by the written or
               verbal agreement of the parties to the transaction.
          IV. For the purposes of this Directive, a professional intermediary is a natural or legal person
               who, in a professional capacity, intervenes in transactions in securities. This definition
               includes commission agents, banks and other institutions recognized as dealers in securities,
               stockbrokers, intermediate brokers and jobbers, except where they act as nominees or as
               administrators of capital assets, e.g. trustees. This definition also includes collective
               investment undertakings, by which is understood investment companies and unit trusts
               whose principal object is the collective investment of capital collected by means of offers
               to the public, and whose operations are based on principle of distribution of risks.
           V. For the purposes of this Directive, 'issue of securities' means the allotment of securities
               by the issuer, including that resulting from capitalization of reserves.