The U.K.’s challenge of the E.U. Financial Transaction Tax (FTT), although rejected, helped to draw attention to the some of the controversial extraterritorial elements of the tax, says Brown Brothers Harriman.
The European Court of Justice (ECJ) rejected the challenge to an E.U. decision allowing 11 countries to introduce an FTT under rules under enhanced cooperation.
An ECJ statement says: “The court considers that the arguments put forward by the United Kingdom are directed at elements of a potential FTT and not at the authorisation to establish enhanced cooperation, and consequently those arguments must be rejected and the action must be dismissed,” said a statement.
“[The British objections] can therefore not be examined before the introduction of the FTT.”
Sean Tuffy, head of regulatory intelligence at BBH says that the rejection of the challenge was done so on fairly narrow grounds. “The ECJ ruling essentially said that the “enhanced cooperation” mechanism was not inherently extraterritorial. The door is still open for the U.K. to challenge the specifics of the FTT when or if it is ever finalized,” says Tuffy.
The rejection is not a complete loss for the U.K. says Tuffy. “However, it’s important to remember that the EU Council’s Legal Service also believes that certain elements of the extraterritorial application of the FTT are contrary to EU law,” he adds. “The FTT remains a highly emotive issue and I’m sure that there will be a lot more heated debate before it’s finalized.”
11 Member States, namely Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia agreed to established an enhanced cooperation between themselves in the area of FTT.
All is Not Lost in Rejection of U.K.’s FTT Challenge
The U.K.’s challenge of the E.U. Financial Transaction Tax (FTT), although rejected, helped to draw attention to the some of the controversial extraterritorial elements of the tax, says Brown Brothers Harriman.
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