Court to rule on UK’s challenge to financial transaction tax

The European Court of Justice will rule on Wednesday (30 April) on the United Kingdom’s challenge to efforts by 11 EU member states to impose a tax on financial transactions within their territories, in a judgment predicted to go against the UK.

A ruling on the appeal was not expected before mid 2015, but the ECJ shortened proceedings by deciding not to commission advice from the advocate-general assigned to the case, nor to hold a hearing. Lawyers have told European Voice that this does not bode well for the UK.

The European Commission proposed a financial transaction tax in 2011, although several member states, including the UK, exercised their veto and blocked an EU-wide proposal. But 11 member states, including France, Germany, Italy and Spain, said they would seek to agree the rule among themselves on the basis of the rarely used ‘enhanced co-operation’ procedure.

This prompted a legal challenge in May 2013 from the UK, which argued that the decision was illegal because it would produce legal effects on and entail costs for non-participating countries. Judgments on such legal challenges take an average of two years.

In the meantime, the 11 member states have made only slow progress on striking a deal on a financial transaction tax. EU diplomats moved quickly to play down claims by Luis de Guindos, Spain’s finance minister, that the group had struck an agreement in principle during a meeting of finance ministers on 2 April. The participating member states are still divided over how to tax transactions involving derivatives.

Greece, which currently holds the rotating presidency of the Council of Ministers and is a member of the group, aims to achieve an outline agreement in the margins of a meeting of EU finance ministers on 6 May. This would allow it to present the deal to all EU finance ministers for endorsement at the following meeting, on 20 June.

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