The Law Society today urged ministers to continue their campaign against an EU tax on financial transactions after the European Court of Justice threw out a UK challenge to the measure.
In Case C-209/13 United Kingdom v Council the UK government asked the court to annul a council of ministers decision authorising 11 member states to use the enhanced cooperation procedure to set up a financial transaction tax (FTT) when they failed to gather unanimous support for the measure.
The UK, which was one of the objectors, denounced the proposed tax as ‘poorly designed, badly timed and… unlawfully extraterritorial’. It argued that the FTT would impose costs on non-participating member states.
However the court today ruled that the UK’s arguments were directed at elements of the FTT, and not at the enhanced cooperation procedure, the subject of its challenge. ‘Consequently those arguments must be rejected and the action must be dismissed.’
Gary Richards, chair of the Law Society’s tax law committee, said today’s ruling would not close the door to future challenges on the substance of the FTT. This is still being negotiated as the 11 participating member states have ‘yet to reach agreement on some of the most basic aspects’, he said.
‘We will continue to urge the [participating] countries to take into account the problems with extraterritoriality in the original proposal,’ he said. ‘EU treaties are clear that any substantive law arising out of enhanced cooperation must respect the rights of those countries which have decided not to participate.
‘If the final FTT proposal forces a degree of involuntary participation on those countries, a legal challenge to that piece of legislation would remain on the table as an option irrespective of today’s ruling.’