Brussels, 04/12/2015 (Agence Europe) - On Friday 4 December, the European Commission called on the countries involved in enhanced cooperation over the financial transactions tax (FTT) to “to have the courage to intensify their efforts in order to reach a deal on this file next week,” the week beginning 7 December 2015.
The eleven FTT countries' finance ministers will meet up on Monday evening after the Eurogroup meeting, and progress in this connection will also be discussed by the EU28 ministers during the Ecofin Council on Tuesday 8 December.
“We sincerely hope that a common understanding on a future Financial Transaction Tax can be reached. Following their commitment to conclude this agreement by the end of this year, participating Member States now have only a small window left to make good on this pledge,” said European Commission spokeswoman Vanessa Mock on Friday 4 December.
After two years of enhanced cooperation talks, some sources say the negotiators are losing patience. They say that Austria, which is piloting the talks at the political level, may throw in the towel if no agreement is reached on Monday. Austrian sources say finance minister Hans Joerg Schelling will report to the Ecofin Council on progress in the talks, as he himself had said after the last meeting of the ministers in November, and “anything else is just rumours.”
The Luxembourg Presidency says that the EU28 talks will not be a policy debate and it is unlikely that agreement will be reached ahead of the Ecofin Council.
After the last meeting, Schelling said that Italy wanted sovereign bond derivatives to be covered by the tax, despite the fact that their exclusion seemed to have been agreed. According to a document dated 9 November, Slovenia also had reservations in this connection. A meeting on 25 November discussed the option of exempting derivatives that were directly and 100% based on sovereign debt. In practice, this exemption could cover term contracts, share option contracts and credit default swaps.
Slovenia (and Estonia) also had reservations about territoriality for shares, in other words the cumulation of the principles of residence and issuance that apply solely to shares in the eleven participating countries, with a re-assessment clause for the scope of application. This would enable member states wishing to go further in their own country to do so and levy the tax on products that are currently not covered by the directive. In the light of Slovenia's reservations, some sources say the country's commitment to the question is fragile.
Some member states, notably Belgium and Germany, are worried about how the FTT would impact on pension funds. PensionsEurope took advantage of the future meeting to ask countries to withdraw the FTT or, if that is not possible, to exempt pension funds from it.
In European circles, some sources raised the option of a tax on financial activity rather than a tax on financial transactions. Whatever happens, failure to reach agreement on an FTT on Monday will result in a reassessment of the issue and possibly starting from scratch.
The European Commission feels that more hangs on agreement this week than simply the future of the FTT because this is an opportunity to demonstrate that enhanced cooperation works for tax questions. Despite its decision to take a different approach to the question of the common consolidated corporate tax basis (CCCTB) to unblock talks at the Council, the Commission knows there is no unanimous agreement about a common tax basis and it will probably be necessary to revert to enhanced cooperation. (Original version in French by Elodie Lamer)