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The Court of Justice of the European Union (CJEU) has dismissed the UK’s challenge of plans by Brussels for a financial transaction tax (FTT).
The country asked the court to annul a council decision that authorised 11 EU member states to use the enhanced cooperation procedure to set up the tax – which the UK believed would impose costs on non-participating member states.
The Court of Justice of the European Union (CJEU) has dismissed the UK’s challenge of plans by Brussels for a financial transaction tax (FTT).
The country asked the court to annul a council decision that authorised 11 EU member states to use the enhanced cooperation procedure to set up the tax – which the UK believed would impose costs on non-participating member states.
The CJEU dismissed the action, saying the authorisation of enhanced cooperation was valid. The court concluded the UK’s arguments were directed at elements of a potential FTT and not at the authorisation to establish enhanced cooperation.
The Confederation of British Industry’s chief policy director, Katja Hall, said the CJEU’s decision “does not change the fact the FTT will damage growth, jobs and investment across Europe”.
She claimed the tax “will have a far-reaching impact on non-participating member states by including extraterritorial reach into financial services activity conducted in the UK. As the UK’s largest single trading partner, a healthy European economy is in everyone’s interests, so we urge that this damaging tax is reconsidered.”
KPMG head of tax policy Chris Morgan noted the core of the UK’s objection to the FTT was the potential impact on financial institutions: insurance companies and asset managers as well as banks.
He said, “The draft proposals would have imposed the tax on UK financial institutions, and created a cost for the UK, even though the UK had decided not to implement the FTT. The court… pointed out the elements the UK complained of did not form part of the European Commission’s decision to allow other member states to proceed with the enhanced cooperation.
“At this stage, the UK could only challenge the issuing of that decision and, from a procedural point of view, that decision was issued correctly.”
Morgan added, “The court did not comment on the merits of the UK’s challenge to some of the proposal for the FTT. The enhanced cooperation process has been moving forward again in recent months, and it seems possible, depending on the outcome of that process, that there may be a further UK challenge to an EU FTT. Whether this happens, and the prospects of success, will depend on the scope of the charge and its impact on states… that have chosen not to participate.”
