On February 14, the European Commission released draft text for a proposed financial transaction tax directive. If the text is implemented into law a financial transaction tax (FTT) will be payable to the tax authorities in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia, Slovakia and any other European Union Member State that chooses in due course to participate (Participating States).

The proposal for a directive seeks to apply the FTT to financial transactions carried out by financial institutions that are party to the financial transaction, either for their own account or for the account of other persons, or acting in the name of a party to the transaction. The FTT applies to transactions where a party is deemed to be established in a Participating State (the residence principle) and also where financial instrument traded in the transaction is issued in a Participating State (the issuance principle).

The rate of taxation is not to be lower than 0.1% of the taxable amount for financial transactions that are not related to derivative contracts and 0.01% of the taxable amount for financial transactions that are related to derivative contracts. Any Participating States which currently impose a tax on financial transactions are prevented under Article 15 of the FTT from maintaining such a tax or from introducing a new financial transactions tax.

More information is available here and here.