COM(2013) 71 final
In scope instruments
Broad definition of financial instruments, including securities, money-market instruments, units in collective investment undertakings, derivatives agreements (e.g. options, futures, swaps, forward rate agreements) and structured products.
Taxable event (transaction)
Financial transactions include the purchase/sale and exchange of financial instruments (including repurchase and reverse repurchase), securities lending and borrowing agreements, intra-group transfer of the right to dispose of a financial instrument as owner and the conclusion of derivatives agreements.
Territorial connection for liability – condition for taxability is:
Residence of issuer?
Transactions involving certain financial instruments issued in a participating Member State will be taxed even if those trading them are not established in the FTT zone. This can result in party or financial institution being deemed established in a participating Member State (see ‘residence of financial intermediary’ below).
Location of transaction (e.g. traded on local stock exchange)?
In general not relevant.
Location of party (e.g. at least one party to the transaction is resident)?
At least one party to the transaction is established in the EU and an EU financial institution is party to the transaction (acting either for its own account or for the account of another person), or is acting in the name of a party to a transaction.
Residence of financial intermediary?
Even financial institutions that are not resident in a participating Member State can be liable for FTT in certain circumstances (e.g. when the transaction involves a financial instrument issued within a participating Member State, or when the transaction is with a counterparty in a participating Member State).
Other relevant conditions for taxability
Primary market transaction (other than the issue and redemption of UCITS units), transactions with various entities such as the EU, the European Central Bank, the European Investment Bank, certain international organizations, central banks of EU Member States, certain restructuring transactions. Certain entities are also exempt from FTT, e.g. central counter parties. Where a financial institution acts for another financial institution only the latter is liable to FTT.
Person responsible for collecting/remitting tax
The tax is payable by each financial institution party to the transaction (i.e. acting either for its own account or for the account of another person), acting in the name of a party to the transaction, or on whose account the transaction is carried out.
Each party to a transaction, including persons other than financial institutions, is jointly and severally liable for the tax due by a financial institution on the transaction.
Person who in practice bears the tax
Not yet known.
Liable persons are required to file an FTT return (according to the legislation of the Member State where the tax is due). Financial institutions are required to keep and put at the disposal of the tax authorities relevant data on financial transactions, for at least 5 years.
Penalties in case of failure to file/pay
According to the legislation of the Member State where the tax is due.
The taxable amount depends on the type of financial transaction. In case of a financial transaction other than a derivatives transaction, the taxable amount is the value of consideration paid as part of the financial transaction or the arm’s length market price of a transaction in certain circumstances. In the case of transactions involving derivatives, the taxable amount is the notional amount.
0.1 percent for financial transactions other than those related to derivatives agreements and 0.01 percent in the case of derivative agreements.
The above rates are minimum rates.