EU FTT Collection
Potential collection models
Joint EBF-FBF Tax Conference 2014 - Paris, 22 September 2014
Assessing potential EU FFT collection models
From self-assessment to a central collection functionality
 Self-assessment involves liable parties to report chargeable transactions and remit any FTT due to the
relevant tax authorities
 A centralized collection functionality generally involves a (I)CSD or a new utility collecting the FTT on
behalf of its members/participants (who may be acting for their own account or for third parties)
Broadly the functionality of a central collection mechanism may either be
 Limited: requires users to flag instructions or use different accounts according to the applicable EU FTT treatment
(incl. remittance country, exemption flags, applicable rate, etc. ). Chargeability is determined at the broker/dealer
or the investor’s custodian level and the logic to be built centrally would only have to be able to read the flags and
not obtain and interpret the full transaction data; or
 Expanded: based on centralizing all (or several) data required to determine FTT liability and to contain (and run) a
central FTT logic on those data to determine FTT liability centrally, with (data regarding) every chargeable transfer
to be sent to a central system.
Joint EBF-FBF Tax Conference 2014 - Paris, 22 September 2014
Assessing potential EU FFT collection models
Design objectives and challenges
1. Determining FTT Liability
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Is transaction subject to FTT?
Who is liable for the payment of the FTT?
2. Collection and Remittance of FTT
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Who is responsible for the collection and the remittance of the tax
Who will bear the cost of FTT collection?
3. Enforceability and audit
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Who will be responsible for enforcing the FTT?
How will be FTT be enforced in the different markets and in countries outside the FTT zone?
What are the applicable reporting requirements?
Who will be responsible for auditing FTT compliance?
What are the sanctions for non-compliance?
4. Cost of implementation and operation must be reasonable
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To what extent can existing reporting requirements be re-used?
Is STP possible?
Joint EBF-FBF Tax Conference 2014 - Paris, 22 September 2014
Joint EBF-FBF Tax Conference 2014 - Paris, 22 September 2014
Joint EBF-FBF Tax Conference 2014 - Paris, 22 September 2014
Key challenges and questions
Limited central functionality vs. mere self-assessment
 What are the benefits (of an approach with limited central functionality) compared to a mere self-assessment collection model?
 Which added value does a central collection model with a limited functionality offer above a separate calculation at broker level (mere selfassessment)?
 Which role could delegation (of collection responsibility) play in this respect?
 Impact of collection on liability?
Limited vs. expanded central functionality (degree of central functionality + associated costs)
 What specific benefits (or disadvantages) do market participants see in a more expanded role of the central collection approach in connection
with EU FTT collection, in view of the potential central functions that may be envisaged: e.g. back-up data, reporting, determining liability, …
 Cost and benefits of required FTT data upstream for information and auditability purposes, i.e. the tax authority perspective, and for
determining liability? Cost of building a full EU FTT logic?
 Need to develop separate functionality for reporting gross transactions that are otherwise not visible to the FTT collector?
 Linking trading counterparties
Joint EBF-FBF Tax Conference 2014 - Paris, 22 September 2014
Key challenges and questions
Who is to perform (operate) central collection functions?
 Who can operate such a central system? An existing or a new utility? Can we re-use the CSD (is this a relevant argument or is it more like a
constraint (what in case of no membership? What if fees to high?) Can CCPs perform FTT collection functions? Should global custodians be
offered the option to collect FTT?
 How/where to capture OTC and intra-group transactions?
 If one opts for a new utility, what fee structure could such new utility use? Assessing the suitability of an expanded centralized collection
approach, do market participants believe data centralization is a too costly option?
Centralised collection functionality & the need for clear rules on primary liability/rules capable of
automatic processing
 Are the challenges regarding clear rules (and rules capable of automatic processing) impacted by the centralized collection approach chosen?
 Would an expanded centralised collection approach would solve the unclear rules issue (given that the use of a centrally developed FTT logic)?
 Are the rules (such as the lack of economic link exception) proper for automatic processing at collection level?
Joint EBF-FBF Tax Conference 2014 - Paris, 22 September 2014
Joint EBF-FBF Tax Conference 2014 - Paris, 22 September 2014