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EU financial transaction tax faces yet more roadblocks

First Published 20th February 2017

This time insurance firms and pension funds are the problem.

The fledgling group of 10 EU member states still trying to adopt some form of FTT in Europe is facing yet more roadblocks.

Two countries (Belgium and Slovakia) want pension funds to be exempt. But this is a problem, as many pension funds are private enterprises (often parts of larger insurance firms, for example).

Exempting these would in turn make the expected revenue expectation from an FTT meaningless and would also unfairly advantage that part of the financial services sector (and undoubtedly open up roads to tax arbitrage... just wrap your trading activities in some sort of pseudo-insurance or pension vehicle).

Another relatively new consideration is that, due to Brexit, a number of continental European countries have their eyes on a slice of the London financial services pie. However, if they are intending to tax trading in their respective jurisdictions, this is hardly going to be seen as an incentive for banks and buy-side firms to make this their new home. This poses a problem for officials beating the marketing drum trying to attract businesses with plans to move outside of the UK.

The next meeting in Brussels will surely result in more kicking of the can down the road.