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Brussels, 12 February 2008

Taxation of capital: Commission welcomes adoption by the ECOFIN Council of a recast of the capital duty directive

Following the general approach agreed on 4 December 2007, pending the opinion of the European Parliament, the ECOFIN Council today adopted a recast of Directive 69/335 concerning indirect taxes on the raising of capital (capital duty directive). The European Commission welcomes this recast which simplifies the legislation and ensures that restructuring operations shall not be subject to capital duty. Capital duty is an indirect tax levied on contributions of capital for capital companies and restructuring operations involving capital companies. Today, only 7 of the 27 Member States continue to levy this tax.

László Kovács, Commissioner responsible for Taxation and Customs, said: "I am very happy that the Council has adopted this recast, which is an important simplification of a very complicated piece of Community legislation. The rules have been clarified and given a new structure. At the same time we have ensured that restructuring operations, as well as transfers of companies between Member States, shall not be subject to capital duty."

The recast is part of the Commission's "Better Regulation" exercise. It clarifies and simplifies the Directive in view of the problems that arose from its interpretation. The recast Directive:

  • changes radically the structure of the Directive in order to reflect past amendments, with the ultimate aim of abolishing capital duty but with concessions due to the revenue losses this would imply,
  • covers both restructuring operations that involve an increase in capital and restructuring operations that do not. The latter previously fell outside the scope of the Directive,
  • gives provisions that apply equally to restructuring operations affected by contributions of assets and by exchange of shares; both types of restructuring operations are henceforth exempt from capital duty,
  • ensures that the transfer of a capital company between Member States shall be exempt from capital duty.


The Council Directive recasts Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital. When adopted, the purpose of Directive 69/335 was to harmonise the taxes on the raising of capital, with regard to both their structures and rates, and to prevent Member States from creating or levying other similar taxes.

In 1985 Member States were given the option not to levy a capital duty at all or to charge duty on the transactions falling within the scope of the Directive at a single rate not exceeding 1%.

Since 1985, the trend has been towards an elimination of capital duty in Member States. Today, only 7 (Greece, Spain, Cyprus, Luxembourg, Austria, Poland and Portugal) of the 27 Member States continue to levy this tax.

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