TAX NEWS - October 2009
U.K. Stamp Duty: European Court of Justice Decides U.K. Levies Stamp Duty Reserve Tax Illegally
The European Court of Justice, the top court of the European Union decided that the 1.5% British tax levied on transaction of shares breaks the European Union law and is against the EU Capital Duty Directive. The court stated that the 1.5% stamp duty reserve tax is 3 times higher than the standard 0.5% rate.
According to the EU Capital Duty Directive, all EU member states should charge capital duties so that they will be same in all EU member states, providing free movement of the capital.
HMRC, tax authority in the United Kingdom announced that they will stop levying the 1.5% Stamp Duty Reserve Tax on share transactions occured by using a clearing service in the European Union.
The decision of the European Court of Justice is welcomed by HSBC, but it will definitely cost HMRC, the Britain's tax office, some tens of millions of pounds of tax revenue.
The story for the decision of the European Court of Justice goes back to a court in the UK where HSBC asked for a refund of the Stamp Duty Reserve Tax they paid. After the last decision of the European Court of Justice, it is possible that other companies in the UK who have previously paid the Stamp Duty Reserve Tax may apply for a tax claim.
Read more about Taxation in the United Kingdom.