1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
It's a political trick. They are asking for the most they can imagine to obtain half of it in the end.
The US need to put pressure on France on the bilateral treaty they are ignoring. If France can't even tax something with" french" written all over it, extraterritorial reach is DOA...
The US need to put pressure on France on the bilateral treaty they are ignoring. If France can't even tax something with" french" written all over it, extraterritorial reach is DOA...
Some of the media reporting yesterday was fuzzy on how the residence and issuance principals work. Please clarify the below.
Residence principal: An American trades an American-issued stock - not an EU 11 ADR - with a French resident. FTT is withheld on the French investor's buy and sale only, not on the American.
Issuance principal: An American trades an EU 11 issued and covered financial instrument and FTT is withheld on their buy or sale, no matter who they trade with worldwide.
My comments last night on WSJ were off base. Americans can avoid the EU 11 FTT by simply not trading EU 11 covered instruments. So, there shouldn't be a FTT surprise to educated investors.
Residence principal: An American trades an American-issued stock - not an EU 11 ADR - with a French resident. FTT is withheld on the French investor's buy and sale only, not on the American.
Issuance principal: An American trades an EU 11 issued and covered financial instrument and FTT is withheld on their buy or sale, no matter who they trade with worldwide.
My comments last night on WSJ were off base. Americans can avoid the EU 11 FTT by simply not trading EU 11 covered instruments. So, there shouldn't be a FTT surprise to educated investors.
afaik, as indicated in the old proposal (and there haven't been changes in this respect in the new proposal) both parties are liable for tax when trading with a european counterparty, regardless of the issuance principe. so in above example the american would be liable as well.
the issuance principle only comes into play when two non-ftt parties trade an ftt-product.
Thanks, I got confused on this point and it makes a huge difference. Based on what bjw says above, my WSJ comments are correct, the tax is a huge sneak attack after the fact. You can't know who you are trading with in advance of trade execution. With so many intermediaries involved, it's very confusing. How can the U.S. Treasury allow Americans to be hit with a hidden after-the-fact EU 11 FTT as part of settlemen? It will freeze markets, because we won't know where EU 11 traders and investors are lurking. This type of extra-territorial reach is systemic risk and it threatens American markets. The regulators and Treasury must block it.
It's been mentionned before that could be implemented by taxing the FTT11 resident twice the amount ( ie he would pay the american counterparty tax in the case above). Looking pretty insane. I strongly dislike the way Euro zone is moving, can't seem to rein in its public services and increasing taxes across the board, while its economy is lagging even its non euro zone neighbours.
plus there are some pretty hefty double taxation problems
what if an investor trade shares with a ftt-trader on the london stock exchange? he would have to pay BOTH the UK Stamp Tax AND the EU FTT. this is going to go crazy.
it's exactly the way how one would design an FTT when most of the world is signing up, and you want to force the remainder of the world to follow suit. if enforced, there's a lot of incentive for the non-ftt countries to also join. You have to collect the tax anyway for others, why not simply join and at least make a buck out of it. This FTT is clearly designed as a global tax and it's the only way it can be applied without creating huge double taxation and collecting problems; considering it's adopted by only 11, mostly mediocre, euro-countries makes it a huge huge bluff though.
what if an investor trade shares with a ftt-trader on the london stock exchange? he would have to pay BOTH the UK Stamp Tax AND the EU FTT. this is going to go crazy.
it's exactly the way how one would design an FTT when most of the world is signing up, and you want to force the remainder of the world to follow suit. if enforced, there's a lot of incentive for the non-ftt countries to also join. You have to collect the tax anyway for others, why not simply join and at least make a buck out of it. This FTT is clearly designed as a global tax and it's the only way it can be applied without creating huge double taxation and collecting problems; considering it's adopted by only 11, mostly mediocre, euro-countries makes it a huge huge bluff though.