EU Member State Comparative Financial Transaction Tax Survey - France 

Status

In force

Introduced

1 August 2012

Legislative reference

Article 6 of 2012 Finance Bill:

1. Tax on transactions in shares and assimilated securities.
2. Tax on “high-frequency” trading.
3. Tax on transactions in sovereign credit default swaps.

In scope instruments

1. Shares and assimilated equity securities:
• ordinary shares, preferred stock, twin shares, profit sharing certificates, etc.
• other securities that give, or could give, access to capital and voting rights
• depositary receipts, i.e. which entitle to specific rights attached to an underlying security issued by an entity other than the issuer of the underlying security including American depositary receipts (ADR) and European depositary receipts (EDR) - for acquisitions made as of 1 December 2012.
2. Shares only (as defined in Art. L 212-1A of Monetary and Financial Code).
3. Credit default swap on EU Member States.

Taxable event (transaction)

1. The acquisition for valuable consideration of shares of listed companies - covers securities purchases (whether direct purchases or purchases through the exercise of an option or a forward sale with a physical delivery) as well as exchanges and issuances in consideration of contributions. The tax only applies when an acquisition results in a transfer of ownership.
2. “High frequency” trading.
3. The acquisition of naked sovereign credit default swaps.

Territorial connection for liability – condition for taxability is:

Residence of issuer?

Yes - shares of listed companies whose head office is in France and whose market capitalization exceeds 1 billion euro (EUR) as of 1 January the taxable year.

Location of transaction (e.g. traded on local stock exchange)?

N/A

Location of party (e.g. at least one party to the transaction is resident)?

1. The tax applies to acquisitions made by French or non-French residents, irrespective of whether one of the parties in the transaction is French.
2. Transactions carried out by companies operating in France.
3. Acquisition by purchaser established in France.

Residence of financial intermediary?

N/A

Other relevant conditions for taxability

The list of French companies whose shares fall within the scope of FTT will be set on 1 December of the year preceding the year of taxation (starting 1 December 2012 for tax year 2013).

For 2012, the list was published by the French Ministry of Finance on 12July 2012 and is available at http://www.legifrance.gouv.fr/jopdf/common/jo_pdf.jsp?numJO=0&dateJO=20120714&numTexte=17&pageDebut=11566&pageFin=11567.

Exempt transactions

1. • subscriptions made upon the issuance of equity securities (underwriting or placement on a first commitment basis)
   • transactions realized by clearing houses and central depositories in the course of their regulated activities
   • acquisitions undertaken by market makers in the course of their market making activities
   • transactions under liquidity contracts
   • intra-group transactions and restructuring transactions
   • acquisition of bonds convertible or exchangeable into shares
   • temporary disposals of securities listed by the Regulation n°1287/2006 of the European Commission (including “repos” and stocks lending transactions).
2. market making activities
3. market making activities; beneficiaries holding corresponding long positions.

Person responsible for collecting/remitting tax

1. The Investment Service Provider or “broker” who has executed the transaction on its own behalf or on behalf of its client.

   
   

   In the case of a chain of intermediaries involved in the execution process of a buying order (execution brokers), the FTT is due by the broker who directly receives the order from the final investor.

   
   

   When the transaction is not executed by a broker (e.g. over-the-counter (OTC) transactions), it is the securities account holder for the investor.

2. Company executing transaction.
3. Beneficiary of contract.

Liable persons

1. Same as person responsible for collecting/remitting tax.
2. Same as person responsible for collecting/remitting tax.
3. Same as person responsible for collecting/remitting tax.

Person who in practice bears the tax

1. The buyer.
2. Same as person responsible for collecting/remitting tax.
3. Same as person responsible for collecting/remitting tax.

How enforced

1. Tax declaration and payment must be delivered to Euroclear France or directly to the French tax authorities depending on the number of intermediaries between the liable party and Euroclear France.
2. Tax declaration and payment.
3. Tax declaration and payment.

Penalties in case of failure to file/pay

1. Penalties for failure to perform declaration obligations, provide information, or for late payment
2. Same as for VAT
3. Same as for VAT

Tax base

1. For the acquisition of shares of listed companies: acquisition value - the selling price of the transaction for trades on a market or with a counterparty; the exercise price of a derivative that gives rise to a delivery of securities; the price agreed in the issuance contract for the conversion or exchange of a bond.
2. High frequency trading: the amount of cancelled or modified trading orders on a given trading day exceeding a threshold (80 percent) of total trading orders.
3. The notional amount of the contract

Tax rate(s)

1. 0.2 percent
2. 0.01 percent
3. 0.01 percent

Cap/Floor/Threshold/Allowance

N/A

Other comments

N/A

* STC Partners is an independent French law firm affiliated with the KPMG global network.

** Fidal is a separate and distinct organization from KPMG International and KPMG member firms and should be described as such.