Germany, France Push for 0.2% Tax on European Stock Trades

(Bloomberg) -- Stock buyers in Europe would pay a transaction tax of at least 0.2 percent of the purchase price under a plan set out by Germany and France.

The two countries are trying to kick-start talks on the tax, which have dragged on for more than seven years, as part of their efforts to strengthen the euro area. Their latest draft proposal holds out the possibility of directing revenue from the levy into a euro-area budget. Some degree of revenue sharing among participating countries is also foreseen, a point that could help sway smaller countries to sign on to the plan.

The European Commission first proposed a financial-transaction tax in 2011 to make sure the industry made a “fair contribution” after taxpayers bore the costs of the financial crisis. When some member states opposed the plan, a smaller group sought a compromise under “enhanced cooperation” rules. Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain are still at the table.

The new German-French plan seen by Bloomberg elaborates on a previously announced proposal that’s based on an existing levy in France. Other key points in the proposal include:

  • The tax would apply to shares issued by companies based in one of the participating countries and whose market capitalization exceeds 1 billion euros ($1.2 billion)
  • Market-making activities would be exempt
  • Intraday transactions would also fall outside the scope of the tax, which would apply only to the “net position of an acquisition at the end of the day”
  • The tax would apply even if the transaction occurs outside the EU

A French Finance Ministry official confirmed that the working paper is part of the plan for reforming the euro area unveiled in June by French President Emmanuel Macron and German Chancellor Angela Merkel. Technical work is under way to move the proposal forward, the official said.

A spokesperson for Germany’s permanent representation to the European Union didn’t immediately respond to a request for comment.

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