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ECJ dismissed the UK’s appeal against the introduction of a Financial Transaction Tax
On 30th April 2014 the ECJ dismissed the UK’s appeal against the introduction of a Financial Transaction Tax ( FTT) via ‘’enhanced cooperation’’.
The main points of the judgment are as follows;
- The UK brought an action to the ECJ in order to overturn the Council’s decision in allowing eleven member states introduce a common FTT through the ‘‘enhanced cooperation’’ mechanism.
- The UK argued against the introduction of the FTT by means of enhanced cooperation based on the following two pleas;
1. The future FTT would have extraterritorial effect which would adversely impact on non-participating member states, and
2. Additional costs would be incurred by non-participating Member States due to the burden of mutual assistance and administrative cooperation.
- Essentially the ECJ dismissed the UK’s appeal on the basis that the appeal is premature given the fact that the principles of taxation in respect of the FTT have not yet been definitively established.
- The ECJ emphasised that this decision should not be ‘’confused’’ with the possibility of taking a subsequent action for annulment against the proposed FTT once the mechanics of the tax have been finalised and implemented.
The above judgment would suggest that this is far from a settled matter. In essence the principle of authorising ‘enhanced co-operation’ for a future FTT is permissible but the permissibility of the FTT itself cannot be determined until it is established and in existence.
It would appear that once the eleven Member States have finalised the mechanics of the system that future actions by non-participating Member States may occur if the enacted legislation has a negative impact on non-participating Member States.
Please contact us if you have any queries in respect of the above.