Financial Transaction Tax (Europe)

May 2013. The U.K Government has launched a legal challenge to the European Financial Transaction Tax (FTT).

One of the aspects of the FTT directive is that the tax applies on the “residence” and “issuance” principles. One of the fears in implementing the FTT directive is that financial institutions will seek to avoid the tax by moving their operations outside of the European states applying the FTT (nominally set at a minimum of %0.1).

The residence principle applies the tax to transactions performed by institutions in a participating member state.

The issuance principle applies to financial institutions wherever located transacting in instruments issues in member states covered by the FTT directive.

In other words, the FTT directive is designed to apply to financial institutions based in other financial centers e.g. London trading in securities of FTT member states. The U.K government feels that the way this tax will impact on them will be highly negative even though they are not a member state in favor of or participating in the FTT.

Contact Murray LLP for further information.

Anthony Murray (212) 729 3045.

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