Study Requested by the FISC Subcommittee: The taxation of the EU’s financial sector
- Fragmentation and Reform Needs: The study highlights significant fragmentation in the taxation of the EU’s financial sector, with diverse taxes like financial transaction taxes (FTTs), bank levies, and VAT exemptions leading to operational complexity and cross-border inconsistencies. It suggests reforms for harmonization to enhance coherence and reduce administrative burdens.
- Empirical Evidence and Impact: The paper reviews empirical evidence on the effects of various financial sector taxes, noting mixed results on market stability and revenue generation. It emphasizes the need for coordinated tax policies to address issues like tax avoidance, competitiveness, and financial stability.
- Recommendations for Harmonization: The study recommends aligning financial sector taxation with EU initiatives like the Capital Markets Union (CMU) and Banking Union (BU). It proposes measures such as eliminating VAT exemptions, coordinating FTTs, and addressing debt biases to improve the overall tax framework and support economic growth.
Source
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