Row over 'Robin Hood tax' rumbles on

Summary: The EU's plans to introduce a financial transaction tax could be doomed.

Legal experts are adamant that the EU's proposed financial transaction tax (FTT) is against the law.

The European Commission came up with the new levy - which has been dubbed "Robin Hood tax" and "Tobin tax" - in September 2011, but has found it impossible to enforce the policy across the continent.

It is aimed at ensuring the financial services sector contributes its fair share to the public purse - something that many would consider is the least the industry can do given the number of massive bailouts that banks have received in recent years.

However, only 11 EU member states have shown any interest in adopting this legislation, including Italy, Spain, Belgium, France, Austria, Portugal, Greece, Slovenia, Slovakia, Estonia and Germany.

The UK first challenged the legality of the tax at the start of 2013 and it seems the European Commission is now encountering opposition from other parts of the continent.

A document believed to have been leaked from the legal service of the EU Council has shown that European lawyers are far from convinced the levy is workable.

The 14-page legal opinion suggests the proposal - in its current format - exceeds member states' jurisdiction for taxation.

Although the document is non-binding at this stage, it could be enough to force the EU to scrap the ambitious plans.

That said, the European Commission is not going to give up easily.

A spokeswoman for Algirdas Semeta, the EU commissioner responsible for taxation, was quoted by Euractiv as saying: "We strongly disagree with the council lawyers' opinion on the FTT (which incidentally only questions one part of the residence principle, and not the tax as a whole or the procedure of enhanced cooperation)."

The representative also insisted the EU carried out a thorough legal analysis before the law was first drawn up two years ago.

It will be interesting to see if the European Commission has the staying power to see this through and the financial services industry will certainly be keeping a close eye on developments.