EU Financial Transaction Taxes

EU Financial Transaction Taxes

The European Commission agreed at the start of 2013 to introduce a harmonized EU Financial Transaction Tax (FTT) directive for the countries who wish to introduce it. In the meantime, two EU countries have already proceeded with country specific taxes on financial transactions. SIX Financial Information provides French FTT data (effective since 1 August 2012) and is providing the tax data for the Italian FTT on shares (in force since 1 March 2013) as well as the Italian FTT on derivatives (in force since 1 September 2013).

One source for EU FTT compliance

In combining the wealth of SIX Financial Information’s securities database with the closeness of local experts throughout Europe, SIX is ready with the required tax data in time when the new regulation is enforced. The information is available primarily through the reference data product, Valordata Feed (VDF), and subsequently the display product, Telekurs iD.

VDF’s fully structured and encoded financial data feed delivers country specific tax information for all in-scope securities and derivatives as each new tax is enforced. Due to the high number and complexity of these products, Financial intermediaries are challenged to identify the country specific transaction taxes on derivatives. Through VDF fully-automated tax services financial institutions can manage the maze of FTTs in a reliable and efficient manner.

SIX Financial Information’s comprehensive tax and compliance services enable you to:

  • Obtain high-quality global reference data through VDF
  • Timely administer tax data, including complex derivatives (up to 15 min. intervals with VDF Pulse)
  • Achieve straight-through processing for tax data
  • Reduce costs over time as VDF structures are suited for the implementation other FTTs

France

Since 1 August 2012 under the French FTT, all financial intermediaries are required to collect taxes on the transfer of ownership of any equity instrument issued by a French listed company whose market capitalization exceeds € 1 billion on 1 January of the year during which the transfer occurs.

Italy

Since 1 March 2013 under the Italian FTT, all financial intermediaries are required to collect taxes from the buyer of shares issued by Italian companies, ADRs and other instruments similar to shares. Exceptions are shares with less than € 500 million market capitalization, market makers and several other specific cases.

Since 1 September 2013 under the Italian FTT, the tax is extended to include derivatives with taxable securities as underlying. The extension signifies that financial intermediaries are required to identify and classify the tax status of thousands of derivatives, including the new derivatives being continuously issued.

Other EU countries

Belgium, Germany, Estonia, Greece, Spain, Austria, Portugal, Slovenia and Slovakia are planning to implement their taxes according to the harmonized EU FTT, which is expected to cover derivatives as well. As a result, the number of securities and derivatives whose tax status needs to be identified will multiply significantly. Further complexity is also on the horizon, as France and Italy are expected to modify the currently taxable securities and derivatives to match the EU-wide rules.