Financial Transaction Tax

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A proposed tax to be levied on certain financial transactions.

In 2011, the European Commission proposed a harmonised Financial Transaction Tax for the entire European Union. The objectives of the proposed FTT were to:

  • prevent the fragmentation of the Single Market that could result from numerous uncoordinated national approaches to taxing financial transactions
  • ensure that the financial sector made a fair and substantial contribution to public finances
  • discourage financial transactions which do not contribute to the efficiency of financial markets or of the real economy.

The initiative was also designed to be a first tangible step for taxing such transactions on a global basis.

FTTs are designed to be levied at the financial institution level.

It is possible that a treasury centre that conducts financial transactions could be regarded as a 'financial institution' for FTT purposes.

Hence, depending on the transaction, a liability to FTT might arise.

The proposed FTT is sometimes written as Financial Transactions Tax.

Still possible

"Tax reforms are not going away ...
Financial transaction tax is still a possibility."
Michelle Price, associate policy and technical director, Association of Corporate Treasurers, The Treasurer, August 2018, p24.

See also