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16 December 2013

Spiegel: Complaint to EU - German banks try to torpedo transaction taxes

German banking associations have sent letters to the Commission urging it to forbid the new financial transaction taxes imposed by France and Italy. Insiders believe the letters are an attempt by the banking lobby to block the planned EU-wide FTT.

Germany's banks have launched a campaign against new financial transaction taxes introduced by France and Italy. According to information obtained by SpiegelOnline, six leading German financial industry groups have lodged an official complaint with the European Commission against both countries. The taxes are "a breach of European law", according to two confidential, almost identical letters dated 23 September, seen by Spiegel. The groups are headed by all the relevant business associations of the German financial sector, including the savings and cooperative banks and the investment fund industry. They also include the Federal Association of Public Banks, which represents state-owned promotional banks and the regional Landesbanken.

The banks have been fighting the introduction of a financial transactions tax for years. European governments want the tax to recoup some of the billions of euros they spent on various bank bailout programmes. The European financial transaction tax that Germany plans to introduce together with France, Italy and eight other EU Member States could end up being especially expensive for the banks.

Two European countries have already gone ahead and introduced their own taxes. In August 2012, France imposed a tax of 0.2 per cent on trade in shares of all national companies with a stock market capitalisation of more than €1 billion. Italy followed suit in March 2013. Both countries charge the tax regardless of whether the transactions took place within their territory. The European tax will work in the same way. The associations call that illegal. "It means that the purchase of French shares by a German customer of a German bank would be subject to the French tax even if the transaction takes place via a German trading site", the six business groups complained in their letter addressing the French transaction tax. That was in breach of European law that prohibits Member States from levying indirect taxes on securities trading and issuance, they wrote.

The European Commission's response has been guarded. "We have received letters of complaint from business associations about the French and Italian financial transaction taxes", said a spokeswoman for EU Taxation Commissioner Algirdas Semeta. She declined further comment.

Insiders in Brussels say the complaint is unfounded. In their view, the EU directive on capital taxes cited by the business groups doesn't refer to trade in securities but to the raising of capital in the primary market -- for example, when a company issues shares or bonds to raise money. The German banks are probably less concerned about French or Italian taxes than about the planned EU-wide tax, said sources close to the Commission. As a result, the banks can't expect much help from the German government, which already rejected a previous complaint from them about the French tax in 2012.

European politicians are angry about the new letters of complaint. "The German taxpayer funded the second-most-expensive bank bailout in Europe, and the state is having a lot of trouble getting its money back", says Sven Giegold, finance policy spokesman of the German Green Party in the European Parliament. "The banking lobby obviously wants to create a precedent for Europe and torpedo any regulation."

Full article 

Further reporting by WSJ

© Spiegel Online

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