independent

Thursday 17 April 2014

Luxembourg backs UK legal bid to halt new tax

Luc Frieden, Luxembourg's finance minister: ‘sympathetic to the stance of UK’

Luxembourg says it will support a legal challenge by the UK against Europe's planned Financial Transaction Tax (FTT).

Ireland, along with the UK and Luxembourg, is opposed to the tax because of fears it could hurt the financial-services industry.

Irish fears are that a tax could hurt international banks and funds that are the major employers at the IFSC.

However, the Government here is not actively supporting the UK's legal effort to kill the new tax. Irish officials say they have not seen the details of the legal challenge instigated by the UK, and are not in a position to comment.

Last year, 11 of the 27 members of the EU voted to introduce the controversial new tax.

The UK is home to the biggest financial centre in Europe and is seen as having the most to lose if finance houses pull out of the EU to countries like Switzerland and Singapore.

Under the plan currently on the table, the UK would probably end up collecting much of the tax as firms there process deals for companies in France, Germany and other countries that are applying the tax.

Finance hub

Luxembourg is also home to a large international finance hub.

"We are very sympathetic to the stance of the UK... We will certainly bring our support to the case that has been started in the European Court of Justice," Luxembourg's finance minister Luc Frieden said yesterday. He was speaking at a banking conference.

The British government last week filed a challenge to the tax at the European Court of Justice.

A successful legal case against the tax would hinder its application outside the 11 countries that have signed up to it and significantly cut the amount of revenue it brings in.

The tax was promoted by Germany which argues that banks, hedge funds and high-frequency traders should pay a share of the costs for the financial crisis

Mr Frieden told Reuters shortly after he made the comments that Luxembourg was now looking at whether to formally add its signature to the UK's challenge, rather than just voice support.

"This is something that I have to examine. We are now in a political process and then I have to look into the details," he said. (Additional reporting Reuters)

Irish Independent

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