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  • Service: Tax
  • Type: Business and industry issue
  • Date: 8/26/2013

Chapter IV: Payment of the common FTT, related obligations and prevention of evansion, avoidance and abuse 

European Commission proposal for a Council Directive implementing enhanced cooperation in the area of financial transaction tax. COM(2013) 71 final. Issued Brussels, 14.2.2013.

Article 10: Person liable for payment of FTT to the tax authorities


  1. In respect of each financial transaction, FTT shall be payable by each financial institution which fulfils any of the following conditions:
      (a) it is party to the transaction, acting either for its own account or for the account of another person;
    (b) it is acting in the name of a party to the transaction;
    (c) the transaction has been carried out on its account.

    The FTT shall be payable to the tax authorities of the participating Member State in the territory of which the financial institution is deemed to be established.
  2. Where a financial institution acts in the name or for the account of another financial institution only that other financial institution shall be liable to pay FTT.
  3. Where the tax due has not been paid within the time limit set out in Article 11(5), each party to a transaction, including persons other than financial institutions shall be jointly and severally liable for the payment of the tax due by a financial institution on account of that transaction.
  4. The participating Member States may provide that a person other than the persons liable for payment of FTT referred to in paragraphs 1, 2 and 3 is to be held jointly and severally liable for the payment of the tax.

Article 11: Provisions relating to time limits for the payment of FTT, to obligations intended to ensure payment, to the verification of payment


  1. The participating Member States shall lay down registration, accounting, reporting obligations and other obligations intended to ensure that FTT due is effectively paid to the tax authorities.
  2. The Commission may, in accordance with Article 16 adopt delegated acts specifying the measures to be taken pursuant to paragraph 1 by the participating Member States.
  3. The participating Member States shall adopt measures to ensure that every person liable for payment of FTT submits to the tax authorities a return setting out all the information needed to calculate the FTT that has become chargeable during a period of one month including the total value of the transactions taxed at each rate.

    The FTT return shall be submitted by the tenth day of the month following the month during which the FTT became chargeable.
  4. The participating Member States shall ensure that financial institutions keep at the disposal of the tax authorities, for at least five years, the relevant data relating to all financial transactions which they have carried out, whether in their own name or in the name of another person, for their own account or for the account of another person.

    In specifying that obligation they shall take account, where applicable, of obligations they have already imposed on financial institutions in view of Article 25(2) of Directive 2004/39/EC.
  5. The participating Member States shall ensure that any FTT due is paid to the accounts determined by the participating Member States at the following points in time:
      (a) at the moment when the tax becomes chargeable in case the transaction is carried out electronically;
    (b) within three working days from the moment the tax becomes chargeable in all other cases.

    The Commission may adopt implementing acts providing for uniform methods of collection of the FTT due. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 18(2).
  6. The participating Member States shall ensure that the tax authorities verify whether the tax has been correctly paid.

Article 12: Prevention of fraud and evasion


The participating Member States shall adopt measures to prevent tax fraud and evasion.


Article 13: General anti-abuse rule

  1. An artificial arrangement or an artificial series of arrangements which has been put into place for the essential purpose of avoiding taxation and leads to a tax benefit shall be ignored. Participating Member States shall treat these arrangements for tax purposes by reference to their economic substance.
  2. For the purposes of paragraph 1 an arrangement means any transaction, scheme, action, operation, agreement, grant, understanding, promise, undertaking or event. An arrangement may comprise more than one step or part.
  3. For the purposes of paragraph 1 an arrangement or a series of arrangements is artificial where it lacks commercial substance. In determining whether the arrangement or series of arrangements is artificial, participating Member States shall consider, in particular, whether they involve one or more of the following situations:
      (a) the legal characterisation of the individual steps which an arrangement consists of is inconsistent with the legal substance of the arrangement as a whole;
    (b) the arrangement or series of arrangements is carried out in a manner which would not ordinarily be employed in what is expected to be a reasonable business conduct;
    (c) the arrangement or series of arrangements includes elements which have the effect of offsetting or cancelling each other;
    (d) transactions concluded are circular in nature;
    (e) the arrangement or series of arrangements results in a significant tax benefit but this is not reflected in the business risks undertaken by the taxpayer or its cash flows.
  4. For the purposes of paragraph 1, the purpose of an arrangement or series of arrangements consists in avoiding taxation where, regardless of any subjective intentions of the taxpayer, it defeats the object, spirit and purpose of the tax provisions that would otherwise apply.
  5. For the purposes of paragraph 1, a given purpose is to be considered essential where any other purpose that is or could be attributed to the arrangement or series of arrangements appears at most negligible, in view of all the circumstances of the case.
  6. In determining whether an arrangement or series of arrangements has led to a tax benefit as referred to in paragraph 1, participating Member States shall compare the amount of tax due by a taxpayer, having regard to those arrangement(s), with the amount that the same taxpayer would owe under the same circumstances in the absence of the arrangement(s).

Article 14: Abuse in the case of depositary receipts and similar securities

  1. Without prejudice to Article 13, a depositary receipt or similar security issued with the essential purpose of avoiding tax on transactions in the underlying security issued in a participating Member State shall be considered issued in that participating Member State, in case a tax benefit would otherwise arise.
  2. For the purposes of paragraph 1, paragraphs 4, 5 and 6 of Article 13 shall apply.
  3. In applying paragraph 1, regard shall be had to the extent to which trade in the depositary receipt or similar security has replaced trade in the underlying security. Where such replacement has occurred to a significant extent, it shall be for the person liable for payment of FTT to demonstrate that the depositary receipt or similar security was not issued with the essential purpose of avoiding tax on transactions in the underlying security.



Article 25(2) of Directive 2004/39/EC of the European Parliament and the Council:


Member States shall require investment firms to keep at the disposal of the competent authority, for at least five years, the relevant data relating to all transactions in financial instruments which they have carried out, whether on own account or on behalf of a client. In the case of transactions carried out on behalf of clients, the records shall contain all the information and details of the identity of the client, and the information required under Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering.


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Source: adapted from the original documents (PDF 186 KB) © European Union, 1995-2013. Responsibility for the adaptation lies entirely with KPMG International.

 

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An overview of nine EU Member States understood to be currently applying a national form of FTT and of the EU proposal for an eleven Member State FTT.

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