Bloomberg reported that the UK has lost in its first legal challenge on the common financial-transactions tax proposed by 11 European Union nations following the ruling of the bloc's top court. The European Court of Justice had said that it was too early to rule on the legality of the talks on the tax proposal. The bloc's top court also said that it has rejected calls from Britain to annul the authorization on the talks as it cannot prejudge the outcome of the negotiations between the eleven EU nations. The news agency said that the ruling indicated that UK will have to continue further with its challenge against the tax once a blueprint of the measure has been adopted by the participating nations.
The court ruling reportedly came before any deal has been reached on the tax's design by the EU countries. Last year, EU finance ministers had allowed the coalition of countries to continue with the development of the common financial-transaction tax, which was based on a draft plan that is expected to produce up to 34 billion euros or $47 billion annually, with Germany producing 11.8 billion euros of the projected amount. EU lawmakers have championed the proposal, and said that the measure was needed to boost the tax contributions of financial firms and also rein in high-frequency trading.
In an email, tax partner Florian Lechner at Linklaters LLP commented about the ECJ decision, "(Today's decision by the ECJ) is not entirely surprising given that it's still too early to know exactly what the final version of the FTT will look like."
Despite its defeat, the UK Treasury had said in a statement that it had filed the case to ensure that it will be able to challenge the tax at a later time. "Today's decision confirms the U.K. will be able to challenge the final proposal for a Financial Transaction Tax if it is not in our national interest and undermines the integrity of the single market. We risked not being able to do that if we had not made this challenge now."
