Brussels, 01/12/2014 (Agence Europe) - The Italian Presidency of the Council has given up on the possibility of being able to present a political compromise on the financial transactions tax (FTT) to the next Ecofin Council, despite having aimed for an agreement on the outlines of an initial application phase of the tax. Instead, it will present the ministers with an overview of the work carried out by the 11 participant states.
In a document it will present to the Ecofin Council, the Presidency notes that a “solid basis for further progress towards an early adoption of an FTT has been elaborated” and “encourages the incoming Presidency to pursue work in a transparent and inclusive manner, while keeping the file high on its political agenda, in order to facilitate the participating member states to reach agreement on taxation of the financial transactions within the expected deadlines”. Initially, however, it was hoped that the Eleven would agree under the Italian Presidency.
The document states that there is an agreement on the idea of taxing transactions in shares in companies quoted on the stock exchange and that a solution has been put forward to allow some states to tax transactions in unfloated shares. More work is still needed on the derivatives to be included in the scope of application of the tax.
The first method proposed by the Presidency to the working group meeting this Tuesday regards the application of the tax with a differentiation of the taxation on derivatives, depending on the maturity and type of derivative. The taxable base will be the notional amount, as in the Commission's proposal, but an adjustment factor will be taken into account. This will be the ratio between the maturity of the contract and a potential maximum maturity, which is selected conventionally.
A second method would be to use the premium as a taxable base for option-type derivatives. The first method, however, would apply to derivatives where the value of the premium is not available or is not appropriate (including swaps and futures). The Presidency is planning to put a series of questions to the member states on these two methods. More work will also be needed on the taxation principle for the FTT (country of residence and/or issuance) and on the collection mechanism, it states in the document to be put to the Ecofin. (EL)