The Financial Transaction Tax Proposal Under The Enhanced Cooperation Procedure: Legal and Practical Considerations

British Tax Review 2013, S. 223

37 Pages Posted: 26 Jun 2013

See all articles by Joachim Englisch

Joachim Englisch

University of Muenster - Faculty of Law

John Vella

University of Oxford - Oxford University Centre for Business Taxation; University of Oxford - Said Business School

Anzhela Cédelle

University of Oxford - Oxford University Centre for Business Taxation; University of Oxford - Faculty of Law

Date Written: February 2013

Abstract

This article examines the European Commission’s Proposal for a Council Directive implementing a financial transaction tax through the enhanced cooperation procedure published on February 14, 2013. It starts by providing a brief description and analysis of the Proposal and the accompanying Impact Assessment, focusing on the newly added features of the proposed tax and its potential impact on both participating and non-participating Member States. Next, the article examines the Proposal from the perspective of public international law, discussing the controversial extraterritorial reach of the proposed tax. It is argued that doubts exist with respect to the compatibility of the “contagion effect” and the issuance principle with internationally recognised legal principles. The article then turns to EU law and considers the legal requirements imposed by the EU Treaties on the use of enhanced cooperation. Whilst raising some concerns in relation to the Proposal’s compliance with these requirements, the article concludes that the political and judicial controlling mechanisms in place appear weak and therefore the outcome of any potential political or judicial challenge remains uncertain. The importance of this debate is not limited to the financial transaction tax, but also extends to the use of enhanced cooperation in other areas of taxation and beyond.

Keywords: financial transaction tax, european union law, territoriality principle

JEL Classification: H24, K34, K33

Suggested Citation

Englisch, Joachim and Vella, John and Cédelle, Anzhela, The Financial Transaction Tax Proposal Under The Enhanced Cooperation Procedure: Legal and Practical Considerations (February 2013). British Tax Review 2013, S. 223. Available at SSRN: https://ssrn.com/abstract=2284733

Joachim Englisch (Contact Author)

University of Muenster - Faculty of Law ( email )

Universitaetsstr. 14-16
Muenster, 48149
Germany

John Vella

University of Oxford - Oxford University Centre for Business Taxation ( email )

Saïd Business School
Park End Street
Oxford, OX1 1HP
United Kingdom

University of Oxford - Said Business School

Park End Street
Oxford, OX1 1HP
Great Britain

Anzhela Cédelle

University of Oxford - Oxford University Centre for Business Taxation ( email )

Saïd Business School
Park End Street
Oxford, OX1 1HP
United Kingdom

University of Oxford - Faculty of Law ( email )

St Cross Building
St Cross Rd
Oxford, OX1 3UL
United Kingdom

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