Brussels, 06/05/2015 (Agence Europe) - The ministerial meeting on the financial transactions tax (FTT) on the fringes of the ECOFIN summit on Tuesday 12 May is expected to discuss two alternative scenarios that Austria is working on, but in order to reduce the number of options, a number of policy issues still need to be addressed.
Agreement looks unlikely in May. German finance minster Wolfgang Schäuble said on Tuesday 5 May: “I am not very optimistic” about an imminent agreement. His own press department quoted him as saying that the negotiations were “very tedious,” but he was very much in favour of such a tax, and: “It won't fail because of Germany.”
A number of sources agree that Austria is considering two alterative scenarios that it could propose, the first being a low rate with a wide scope of application (shares and derivatives but not money market instruments), and the other being reduced scope (shares and possibly some credit default swaps). The rates mentioned for the first scenario are said to be 0.1% for shares and an average of 0.005% for derivatives, and rates would vary for the different types of derivatives for the second scenario but average around 0.001%.
One of the controversial areas in the talks is the principle of taxation. For the first scenario, residence and emission principles are reported to have been raised for shares and residence for derivatives. For the second scenario, discussions are only focusing on the emission principle for shares, and the residence principle for derivatives.
Sources suggest that the most likely outcome is that the finance ministers of the eleven countries involved in the FTT will rule out any options that they do not feel are realistic and will not agree on the broad outline of an initial application of the tax (hopefully from 1 January 2016 onwards) until June. France and Italy are reported to still have some issues, but despite that, it is possible that agreement will be reached. (Elodie Lamer)