Help Print this page 

Summaries of EU Legislation

Title and reference
Indirect taxes on raising capital

Summaries of EU legislation: direct access to the main summaries page.
Multilingual display

Indirect taxes on raising capital

The Directive regulates the levying by Member States of indirect taxes on the raising of capital. It provides for a general prohibition on such taxes, notably capital duty, though certain countries may still be authorised to levy it under certain derogating conditions.


Council Directive 2008/7/EC of 12 February 2008 concerning indirect taxes on the raising of capital.


Capital duty is an indirect tax, which interferes with the free movement of capital. According to the Directive, the best solution would be to abolish the duty, seeing as it is harmful to business development within the European Union (EU).

Tax and the companies concerned

The aim of the Directive is to regulate the levying of indirect taxes on:

  • contributions of capital to capital companies;
  • restructuring operations involving capital companies;
  • the issue of certain securities and debentures.

It applies to the following:

  • limited companies;
  • limited partnerships with share capital;
  • limited liability companies.

It also applies to any company, firm, association or legal person:

  • whose shares can be dealt on the stock exchange;
  • whose members may freely dispose of their shares and are only responsible for company debts to the extent of their shares;
  • and any other company, firm, association or legal person which operates for profit.

The Directive clarifies what is meant by contributions of capital (including the formation of, or conversion into, a capital company, or increases in capital shareholding by contributions of assets or by capitalisation of profits or reserves…) and by restructuring operations such as mergers effected by contribution of assets or by exchange of shares.

Prohibition on levying indirect tax on the raising of capital

EU countries may not levy indirect tax on the raising of capital to capital companies.

These transactions affect the following in particular:

  • contributions of capital;
  • loans or services provided as part of contributions of capital;
  • registration or other formalities required before commencing business because of the company’s legal form;
  • alteration of the instruments constituting the company
  • restructuring operations.

The Directive also prohibits indirect taxes on the issue of certain securities and debentures. However, EU countries may charge certain transfer duties, duties in the form of fees or dues and value added tax (VAT).


Special provisions apply to EU countries that charged capital duty as at 1 January 2006. Those countries may continue to levy the duty, which must be charged at a single rate not exceeding 1 %, and it may be charged on contributions of capital solely. That is, capital duty may not be charged on other transactions, such as restructuring operations.

Capital duty may only be levied by the EU country where the centre of effective management of the capital company is situated at the time when the contribution is made. In addition, capital duty can only be charged once.

Exemptions may be applied to capital companies which supply a public service or have an exclusively cultural or social aim.



Entry into force

Deadline for transposition in the Member States

Official Journal of the European Union

Directive 2008/7/EC

12.3.2008 (articles 1, 2, 6, 9, 10, 11 from 1.1.2009)

Articles 3, 4, 5, 7, 8, 12, 13 and 14 by 31.12.2008

OJ L 46 of 21.2.2008


Proposal for a Council Directive of 28 September 2011 on a common system of financial transaction tax and amending Directive 2008/7/EC [COM(2011) 594 final - Not published in the Official Journal].

In order to make financial services more secure, this Proposal aims to establish a common system of financial transaction tax, the aim of which is to:

  • avoid fragmentation in the internal market for financial services;
  • ensure that financial institutions make a fair contribution to covering the costs of the crisis;
  • establish appropriate measures to make the financial markets more efficient.

Council Directive 2013/13/EU of 13 May 2013 adapting certain directives in the field of taxation, by reason of the accession of the Republic of Croatia (Official Journal L 141 of 28.5.2013).

Council Decision 2013/52/EU of 22 January 2013 authorising enhanced cooperation in the area of financial transaction tax (Official Journal L 22 of 25.1.2013).

Under this Decision, Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia are authorised to establish enhanced cooperation between themselves in the area of the establishment of a common system of financial transaction tax.

Proposal for a Council Directive implementing enhanced cooperation in the area of financial transaction tax of 14.2.2013 [COM(2013) 71 final].

Last updated: 21.04.2014