The European Council adopted a decision authorising 11 member states to proceed with the introduction of a Financial Transaction Tax (FTT) through enhanced cooperation at the Ecofin meeting in Brussels last month. This means that 11 countries (Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia) can progress plans to introduce a harmonised FTT of 0.1% on transactions involving financial instruments and 0.01% on derivatives.

The Commission will now make a proposal defining the substance of the enhanced cooperation, which will have to be adopted by unanimous agreement among the participating member states. It is only the third time that an enhanced cooperation has been launched to allow a limited number of member states to proceed with a particular measure, and the first time in the area of taxation

EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud, Algirdas Šemeta said in a press release that the decision by Council is a “milestone for EU tax policy, as it paves the way for more ambitious member states to progress on a tax file, even when unanimity could not be achieved. Those who want to move ahead, and who appreciate the merits of working more closely on taxation at EU-level, can do so. This is a highly significant and very welcome advance.” However, the French Finance Minister Mr Pierre Moscovici, who is a proponent of the notion, was quoted in the media as saying that the FTT would take some two years to prepare thoroughly. Initial discussions on the operation of the FTT will be chaired by senior Irish officials, by virtue of the Irish EU presidency.

The press release from the European Council noted that the decision was taken by a qualified majority, with the Czech Republic, Luxembourg, Malta and the United Kingdom abstaining.