Ireland will not join any legal challenge to transaction tax

Ireland will not join Britain and Sweden in any legal challenge to a tax on financial transactions being proposed by 10 EU countries in what will be the first enhanced cooperation agreement on taxation among member states.

However, Ireland will not join the 10 that say they will gradually impose the so-called Robin Hood tax that from the beginning of 2016 will see a tax on trading shares and some derivatives.

The agreement — after more than a year of negotiations — looked like falling apart as the countries battled to reach a compromise on a proposal originally put forward by the European Commission three years ago.

Britain fears it may hinder investment in the city of London and may will challenge it in the European Court of Justice if it has a negative effect on the City of London.

Finance Minister Michael Noonan said that Ireland would not join any such action.

“It is coming back to our position with a stamp duty on share and some derivatives” he said. The Government charges a 1% stamp duty on share dealing.

MEP Marian Harkin praised Mr Noonan for saying Ireland will not oppose the financial transaction tax but she called for immediate clarification on the extent of the new tax on derivatives, “the financial mechanism which was the main reason for the collapse of economies across the world”.

Taxation Commissioner Algirdis Semeta said that while it was less ambitious than the original proposal, every step was important and described it as a pioneering move.

“It will be the first regional financial transaction tax in the world; it will strengthen the single market by avoiding a patchwork of taxes and ensure the financial sector makes a fair contribution to tax.”

A number of NGOs and political parties were critical of the slow progress on the tax, with Oxfam describing it as a “vague initial agreement without any critical substance on the scope of the tax”.

Natalia Alonso, head of Oxfam’s EU Office, urged German chancellor Angela Merkel and French President François Hollande when they meet later this week to agree that the tax covered all derivatives.

The 10 countries are Germany, France, Spain, Italy, Portugal, Greece, Estonia, Austria, Belgium and Slovakia.