The Council Legal Service (CLS), a group that advises the European Union, has determined that the Financial Transaction Tax (FTT) is illegal because the tax could be applied in countries outside of the 11 nations that have joined the proposal.
While the CLS’s opinion does not have a legal bearing on the FTT, they represent one of a variety of opinions that take issue with the FTT. The core of the CLS’s disagreement with the EC is the residence principle, which mandates that the tax be applied based on the the location of a financial institution’s headquarters, rather than where the the transaction taxes place. This provision prevents circumvention of the tax, but the CLS believes that tax can not be applied outside the 11 member states.
However, the EC “strongly disagrees” with the CLS’s findings. “The Commission’s legal service carried out a very thorough legal analysis before the Commission presented this proposal, and we stand firm that the proposed FTT is legally sound and fully in line with the EU Treaties and international tax law,” says Emer Traynor, spokesperson for the EC.
The EC expects the 11 countries to look at it as part of the many opinions regarding the FTT, rather than seeing the CLS’s views as the end-all-be-all.
“As such, this opinion does not undermine the good work done and the need to progress quickly now towards a compromise on the legal text to allow the 11 Member States to implement the tax that they called for,” adds Traynor.
The FTT has a proposed implementation date of January 1, 2014.
EU Legal Council Opines the FTT Is Illegal
The Council Legal Service (CLS), a group that advises the European Union, has determined that the Financial Transaction Tax (FTT) is illegal because the tax could be applied in countries outside of the 11 nations that have joined the proposal.
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