A decade after the first proposal to create the so-called Tobin tax , the EU is making another attempt to set a tax on financial transactions. The rotating presidency of the EU, which this semester falls to Portugal, has prepared a document, to which THE COUNTRY has had access, in which it advocates a rate halfway between that already applied by France and Italy that is not only serious the sale of shares, but also derivatives.
The rate will be applied in a coordinated manner in ten countries, although five of them – such as France or Spain – decided not to wait and start implementing it.
The tax for financial transactions, known as the Tobin tax , continues to advance with feet of clay. Ten years after the first Brussels proposal, a dozen countries are seeking a consensus to implement it through enhanced cooperation.
The Portuguese presidency tries to give a push to the works so that by the end of 2022 there can be an agreement that allows the entry into force of a transnational tax in Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain .
The European Commission wants to close a pact between these countries within a maximum period of two years. If it is not possible, Brussels will make a radical redesign of the tribute already in the final leg of the legislature, in 2024.
However, five countries – Belgium, France, Greece, Italy and Spain – look at the rest in the rear-view mirror after having decided start applying it on your own. And that, according to the document, has allowed the tax to go from being almost a utopia to “enjoying a relative technical and political maturity” that facilitates the formulation of a new proposal.
Portugal believes that the “most sensible approach” would be to start testing that tribute on a European scale, as soon as possible, using existing models in France and Italy. The main difference between the two is that Paris taxes the sale of shares , while Rome also taxes derivatives.
The document that Portugal has sent to the rest of the partners puts emphasis above all on the technical aspects, considering that politicians – those who can stop its application again – should be left for another forum.
And it highlights two of the strengths exhibited by the French and Italian models: the safeguards so that no buyer —even if it uses foreign mediators or instruments, even from outside the EU— escapes from paying the tax and the provisions that protect the liquidity of the values setting exemptions or leaving small and medium-sized companies out of the scope of the tax.
The document also stops to analyze the scope of the tribute. Lisbon there opts for the Italian model, which also taxes derivatives transactions. The document states that if they were left outside the scope of the tax, investors interested only in the “economic value of a share, but not in its voting rights” can use those products to evade the payment of the tax.
Despite the fact that the legality of this provision had been questioned, the Court of Justice of the EU upheld it in a case that confronted Italy with Société Générale, considering that the Administration does not violate the free movement of capital with this design of rate.
Portugal attaches to the 20-page document an annex with a detailed explanation of these two fees, carried out by the financial authorities of Paris and Rome. France, on whose model the Spanish tax is based, imposes a rate of 0.3% on companies that are listed on its national markets and whose market capitalization is greater than 1,000 million euros.
Italy applies a rate of up to 0.2% to transactions in securities, derivatives or instruments that incorporate or replicate the shares of a company with a capitalization of more than 500 million euros.
Despite the fact that the document concerns mainly the ten countries that propose to apply the tax, Portugal seems not to give up on incorporating more members and asks the rest of the partners if the need to find resources to pay for the European recovery fund – which will require a debt of 800,000 million — will increase the interest for a broader agreement.
The ‘Tobin Tax’ started in 2011, but never got off the ground. The UK and Luxembourg soon feared that this tax would put their financial markets at risk, so 11 countries decided to move forward after obtaining the authorization of the Council and the consent of the European Parliament.
The tax has been discussed in the Council of Finance Ministers (Ecofin) three times in 2014 and another in 2015. Subsequently, the progress achieved in the taxation and trade groups has been reported on two occasions in 2016 and on another in 2019.
Then, Berlin urged the other nine partners to seek an agreement based on a proposal to set a tax of 0.2% of the value of the purchase of shares of companies whose market capitalization exceeds 1,000 million. Berlin wanted at that time to raise 1. 500 million euros more that would allow it to increase the pensions of between 1.2 and 1.5 million pensioners in 2021.
However, today there are new needs. Brussels is looking for new income that will allow it to repay the 800,000 million debt to finance the recovery plans. And the use of that rate is on the table. The Tax Agency estimated the number of Spanish listed companies at 56 whose shares, as of December 16, 2020, had a market capitalization value of more than 1,000 million euros and whose purchase of securities will be subject to the new tax.
Billion to finance recovery plans. And the use of that rate is on the table. The Tax Agency estimated the number of Spanish listed companies at 56 whose shares, as of December 16, 2020, had a market capitalization value of more than 1,000 million euros and whose purchase of securities will be subject to the new tax. Billion to finance recovery plans.
And the use of that rate is on the table. The Tax Agency estimated the number of Spanish listed companies at 56 whose shares, as of December 16, 2020, had a market capitalization value of more than 1,000 million euros and whose purchase of securities will be subject to the new tax.