The European Parliament voted in favour of the financial transaction tax (FTT) being developed by 11 Eurozone Member States last month. Under the approved proposal, FTT will apply to stocks and bond trades at a rate of 0.1% and derivatives trades at a rate of 0.01% in the 11 EU countries participating under enhanced cooperation. Provision was made for lower rates to apply until January 2017 for trades in sovereign bonds (taxed at a rate of of 0.05% for stocks and bonds, and at 0.005% for derivatives) and the pension fund industry's trades. Participating countries can also apply a higher rate of tax to riskier “over the counter” trades (which are less tightly controlled and transparent than stock exchange traded instruments).

As the European Parliament is limited to a consultative role in tax matters, it is up to participating Member States to transpose the Directive into national legislation. According to the Commission, if agreement is found before the end of 2013, and there is a speedy transposition into national law by the participating Member States, FTT could enter into force towards the middle of 2014.

In the meantime, the UK has challenged the legality of the decision of 22 January 2013 of the Council to authorise enhanced cooperation on a common framework of FTT and the scope and objectives of the initial commission proposal (see Case C-209/13 UK v Council). According to the Commission, this legal challenge has no suspending effect.