World Economy

Ten EU Countries Agree on FTT

Ten EU Countries Agree on FTTTen EU Countries Agree on FTT

Ten eurozone countries agreed on Tuesday on some aspects of a harmonized tax on financial transactions and gave themselves until the middle of next year to reach agreement on remaining issues, including tax rates, the group said in a statement.

A financial-transaction tax (FTT) is intended to recover some of the public money used to support banks, to curb speculative trading and to unify the various levies already charged in several EU countries, Reuters reported.

Talks on imposing one have been dragging on since 2011. In September of this year, ministers from Germany, France, Italy, Austria, Belgium, Estonia, Greece, Portugal, Slovakia, Slovenia and Spain said they had made progress and they expected a political agreement in December.

The statement said all share transactions, including intraday trading, would be taxed. The tax would be paid by traders in one of the countries participating in the scheme on shares issued in those countries.

“In order to sustain liquidity in illiquid market configurations, a narrow market-making exemption might be required,” said the statement. France had insisted on such an exemption.

The ministers said they would analyze whether it would be better to tax all shares, regardless of where they were issued.

 Estonian Concerns

Estonia, which did not sign the agreement, had been worried that because most of the shares traded by its financial institutions are issued outside the participating group, it would hardly get any revenue. At the same time, its traders would have an incentive to move their business elsewhere.

The ministers also agreed that derivatives transactions should be taxed “on the principle of the widest possible base and low rates and it should not impact the cost of sovereign borrowing.”

They said option-type derivatives should be taxed on the option premium. For other types of derivatives, the taxable base could be a term-adjusted or non-term-adjusted notional amount, depending on whether the instrument has a maturity date.

They also agreed to further analyze the impact of the tax on the real economy and pension schemes as well as the financial viability of the tax for each country.

“On the basis of these features, in order to prepare the next step, experts in close cooperation with the commission should elaborate adequate tax rates for the different variants,” the statement said.

The proposal of the European Commission from 2013 envisaged a tax rate of 0.1% on share and bond trades and 0.01% on derivatives trades.

“A decision on these open issues should be made until the end of the June 2016.”

 Cyber-Security Law

EU lawmakers and member states struck a deal on the bloc’s first cyber-security law on Monday that will require Internet firms such as Google and Amazon to report serious breaches or face sanctions.

The deal, following five hours of negotiations between the European Parliament and EU governments, was reached in response to increasing worries about cyber attacks resulting in security and privacy breaches.

European Commission’s digital chief, Andrus Ansip, said the new law would build up consumers’ trust in Internet services, especially cross-border services.

“The Internet knows no border–a problem in one country can have a knock-on effect in the rest of Europe. This is why we need EU-wide cyber-security solutions. This agreement is an important step in this direction,” he said.

The new law, known as the Network and Information Security Directive, sets out security and reporting obligations for companies in critical sectors such as transport, energy, health and finance. Web firms will be subject to less stringent obligations, than, say, airports or oil pipeline operators.

Under the measure, Internet companies such as Google, Amazon, eBay and Cisco–but not social networks like Facebook–will be required to report serious incidents to national authorities, which in turn will be able to impose sanctions on companies that fail to do so.