United Kingdom's challenge FTT dismissed
Monday 5 May 2014
On 30 April 2014 the Court of Justice of the European Union (“ECJ”) dismissed the United Kingdom’s challenge to the financial transaction tax (“FTT”).
The ECJ concluded that at the present time the UK can only challenge the decision of the Council of the European Union to authorize enhanced cooperation regarding the FTT. However, on the grounds the United Kingdom presented, it does not have a case against this decision to authorize enhanced cooperation. This phase is intended still to allow cooperation between the Member States in preparation of possible future legislation As there is no European law in place yet regarding the FTT, simply a proposal for it, a challenge against the FTT itself or elements of it is premature according to the ECJ.
The ECJ’s ruling that the United Kingdom's challenge is premature will not prevent the United Kingdom later challenging any European legislation on the FTT eventually adopted by the 11 Member States under the enhanced cooperation procedure. It follows that the ECJ’s judgment is not dismissing the UK’s arguments in substance and these should be able to be argued by the United Kingdom once the FTT Directive has been adopted. The United Kingdom government will be hoping that the continuing threat of a challenge to the FTT will be taken into account by policymakers in designing the version of the tax to be adopted by the European Parliament.
On 14 February 2013 the European Commission published its detailed proposal for a radical and wide ranging FTT. The scope of the proposed FTT as currently worded would be broad and its impact would be significant on a variety of financial transactions.
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