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Linklaters FTT

Lawyers have said that the Ftt is illegal. What are your opinions on this?

I do not believe most practitioners or institutions consider that the FTT is illegal per se. There are a number of concerns on its economic consequences and also questions which have been raised on certain provisions of the Commission Proposal, particularly its territorial reach. But from a purely legal perspective, this does not mean that a financial transaction tax, possibly in a form amended as compared to what the Commission proposes, could not be introduced without running afoul of EU law.

the document from the EU council Legal Service says that the fact that only 11 EU members are signed up makes the tax ‘discriminatory and likely to lead to distortion of competition to the detriment of non participating member states’. something you agree with?

Is this

This is not exactly the argument made by the EU Council Legal Service; what is discriminatory, in the eyes of the Legal

www.lawyer-monthly.com

OCTOBER 2013

legal or not?

In light of the controversy surrounding the financial transaction tax (FTT) amid claims that imposing it in eleven EU member states would be illegal, Lawyer Monthly speaks to Thomas Perrot, partner in the Tax department at Linklaters Paris for his insight.

Service, is the counterparty principle (Article 4(1)(f) of the proposal), which, broadly, leads to taxing financial institution outside the participating Member States where it transacts with a financial institution or party established in a participating state. The point the Legal Service is making is that under this provision, if a UK bank enters into a financial transaction with a French party, France will levy a tax on the UK bank, whereas it would not tax the bank if it were established in another participating state, Germany, for example. Of course,

in that example

Germany would tax the German bank, but not necessarily under the same conditions and at the same rates as France would tax the UK bank. This, the Legal Service argues, is an impermissible difference in treatment of financial institutions in participating and non-participating Member States.

Another concern the opinion raises is that the collection of the FTT from financial institutions which are not established in a participating Member State will be relatively easy so long as such financial institutions are established in another EU Member State