UK chancellor George Osborne has mounted a legal challenge at the European Court of Justice over the decision to allow 11 EU member states to impose a Financial Transaction Tax (FTT) or ‘Tobin tax’ arguing that it could affect investors and pension savers in the UK.

Osborne has argued that the UK government is concerned about some of the extraterritorial aspects of the proposals that have been lodged. The countries that have signed up to the tax include Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. Under the FTT, derivative tax rates will be 0.01 per cent and a tax rate of 0.1 per cent will imposed on shares and bonds. Osborne has stated that he has concerns over how the tax levy would affect trades completed in London between banks from countries not in the scheme and from UK subsidiaries of banks in participating countries.

Ministers have called for assurances that the FTT will not affect the EU Single Market and have stated that they are not convinced that current proposals will defend the rights of those countries not taking part.

IMA director of authorised funds and tax Julie Patterson said: “The Financial Transaction Tax is not a tax on financial companies but on investors and pension savers including those in the UK. Even though the UK has opted out of charging a FTT, our clients will still have to pay it if they buy securities or deal with counterparts from any of the participating states. It would be good news for savers and investors if the FTT in its current form was abandoned.”

Share Story: