At the ECOFIN meeting of European finance ministers in Brussels yesterday France, Germany, Austria, Belgium, Estonia, Greece, Italy, Portugal, Slovakia and Spain said the FTT on shares and some derivatives would be implemented in their countries by 1 January 2016 at the latest.  Slovenia, the 11th member of the group, did not sign the joint statement, as the country is currently without a government.

The 11, who are using the EU’s ‘enhanced cooperation’ process to bring in the tax after the wider EU failed to back the idea, said that ‘viable solutions’ to achieve an FTT, which could be extended subsequently to cover more derivatives, must be finalised by the end of this year. However, they did not clarify where the tax would be paid, although the original  2011 proposal suggested non-FTT states would have collect the tax due on cross border transactions.

The UK has already made clear its opposition to the likely ‘extra-territorial impact’ of the proposed FTT.  Chancellor George Osborne said: ‘We will see the detail, but we will not hesitate to challenge a FTT that damages the UK, other member states or the single market. It is up to member states if they want to damage jobs and investment in their own member state, but it they want to damage jobs and investment in others, we are entitled to challenge that.’

The UK’s challenge to the use of the enhanced cooperation procedure by the group of 11 was rejected by the European Court of Justice at the end of April, but the government has indicated it may mount another legal bid to halt the introduction of the FTT once the full details are known.

At yesterday’s meeting, Sweden indicated it was also unhappy with the way the breakaway group were developing FTT.  In addition Sweden blocked a compromise to close a tax loophole on hybrid loan arrangements over fears it could hurt a certain type of Swedish investment company.

Following the announcement by the group of 11, Jorge Morley-Smith, director of tax at the Investment Management Association, said: ‘No matter how it is dressed up, an FTT is a tax on savers and investors - not a tax on financial companies. It is harmful for the prospects of long-term savings, investment, and growth in the EU.

'The current Commission proposal could reduce the value of household savings by up to 16%. We urge EU member states to push back against the introduction of an EU FTT, and to demand both full transparency in negotiations and clear understanding of the impact.’