A francia tranzakciós adó

On February 29, 2012, the French Parliament passed the Amended Finance Bill for 2012 (Loi de finances rectificative) introducing a financial transaction tax (FTT). Included in the bill are two additional taxes designed to discourage certain behaviours related to high frequency trading operations and speculation on sovereign debt. 1 The three new taxes will be effective as of August 1, 2012.

 

As a result of the introduction of the FTT, the French transfer duty regime in respect of shares, which was amended as part of Finance Bill 2012, published in December 2011, has once more been modified. 2 The Amended Finance Bill for 2012 changes the rate applicable to the transfer of shares as of August 1, 2012 and specifies that transactions subject to the FTT will not be subject to transfer duties.

2 See further the Landwell Tax eAlerts of December 23, 2011 and January 20, 2012.

II. French financial transaction tax

A. Securities and transactions covered

The FTT will apply to transactions consisting of the acquisition of equity securities (titres de capital) or similar securities within the meaning of Articles L. 212-1 A and L. 211-41 of the French Monetary and Financial Code (Code Monétaire et Financier). This also includes instruments giving access to capital or to voting rights in the company and includes securities issued under foreign law.

These transactions will fall within the scope of the FTT if the following criteria are met:• the above specified equity securities are issued by listed companies which have their head office in France and whose market capitalisation exceeds €1 billion on January 1 of the year during which the transfer occurs. A decree will be issued by the Minister of Economy and Budget to list the companies covered by the tax; over-the-counter transactions on such securities also fall within the scope of the tax.

  • the above specified equity securities are listed on a regulated market within the meaning of Articles L. 421-4, L. 422-1 and L. 423-1 of the French Monetary and Financial Code;
  • the acquisition of the above specified French listed equity securities arises from a direct sale, the exercise of a physically settled option, a forward sale with physical delivery, an exchange or an acquisition of said securities as consideration for a capital contribution; and
  • the transactions result in a transfer of ownership of said securities for consideration.

B. Exemptions

The FTT will not apply in the following situations:

Primary market: the issuance of equity securities including placement or underwriting (Article L. 321-1 of the French Monetary and Financial Code).

Clearing house/central securities depositary: under certain conditions, transfers that are realised by a clearing house or a central securities depositary.

Market making activities: to a certain extent, the acquisition by market makers in the course of their market making activities.

Ensuring liquidity: transactions carried out on behalf of the issuer under a liquidity agreement and complying with the market practices approved by the French Financial Services Authority (Autorité des marchés financiers).

Intra-group transactions: acquisitions made between companies of the same group, e.g.:a) Transactions between companies in the same group within the meaning of Article L233-3 of the French Commercial Code;

b) Transactions between companies in a French tax consolidated group (Article 223 A of the French tax code);

c) Transfer of ownership resulting from a merger, a contribution or a spin-off made under the provisions of Articles 210 A and 210 B of the French Tax Code and the acquisition of shares of a company by its employees.

Temporary transfers: temporary transfers of securities listed by Article 2-10 of the EU Commission Regulation 1287/2006, e.g. stock lending or stock borrowing or the lending or borrowing of other financial instruments, a repurchase or reverse repurchase transaction, or a buy-sell back or sell-buy back transaction.

Employee savings regime: under certain conditions, the acquisition of equity securities in the context of employee savings regimes.

Convertible and exchangeable bonds: the acquisition of bonds (obligations) that can be converted or exchanged for shares.

the FTT will amount to 0.1 percent of the acquisition price of the shares

C. Territorial scope

The FTT will apply to securities issued by entities that have their registered seat in France, regardless of whether the transaction is executed inside or outside of France.

D. Computation and payment of the tax

Tax rate applicable: the FTT will amount to 0.1 percent of the acquisition price of the shares.

Payment of the tax: the tax will be due by the financial intermediary that has executed the purchase order (prestataire de service d’investissement) or, when there is no financial intermediary, by the custodian (teneur de compte-conservateur), irrespective of its place of establishment.

In most cases, the central securities depositary (dépositaire central) will be in charge of centralising the collection of the tax, reporting to the French tax authorities and payment of the tax to the French Treasury.

E. Date of implementation

Acquisitions made as from August 1, 2012 will be subject to the FTT. The first declarations and payments relating to acquisitions occurring between August 1, 2012 and October 31, 2012 must be made no later than November 30, 2012.

III. Taxation of high frequency trading

A. Taxable transactions

High frequency trading is subject to this new tax when transactions occur under the following conditions:• the company is acting as principal with automatic data processing (program trading); the securities traded are equity securities within the meaning of Article L. 212-1 A of the French Monetary and Financial Code (which includes securities giving access to capital or voting rights); and

  • the number of orders subsequently amended or cancelled in one day exceeds a threshold; this threshold will be fixed by future regulations and cannot be less than two-thirds of the transmitted orders.

B. Tax exemptions

Market makers benefit from an exemption to this specific tax under the same conditions applicable to the FTT market maker exemption.

C. Territorial scope

Traders carrying out activities in France are taxable. This will include French branches of non-French traders.

D. Computation and payment of the tax

Tax rate applicable: the tax will amount to 0.01 percent of the value of the orders which are cancelled or amended but only for the portion of the orders exceeding the above mentioned threshold.

Payment of the tax: the tax must be declared and paid no later than the 10th of the month following the order notification.

Date of implementation: orders cancelled or amended as of August 1, 2012 will be subject to the tax.

IV. Tax on credit default swaps on sovereign debt

A. Taxable transactions

The acquisition of credit default swaps (CDS) on EU sovereign debt that are not acquired for hedging purpose are subject to this specific tax. As a consequence, investors who intend to hedge a long position or investors that hold the underlying sovereign bonds are out of the scope of the tax.

B. Tax exemptions

Market makers benefit from a tax exemption to the extent that transactions are undertaken in the course of their regulated activities.

C. Territorial scope

The tax will apply to individuals domiciled in France, to any company carrying out an activity in France (including a French branch of a foreign entity) or any legal entity established or incorporated in France that acquires a derivative intended to transfer sovereign credit risk.

D. Computation and payment of the tax

Tax rate applicable: the tax will amount to 0.01 percent of the notional amount of the credit default swap (i.e. amount used for computation of all the payments relating to the CDS).

Payment of the tax: the tax, which is assessed on the date the parties enter into the CDS, will have to be paid at the date of submission to the French tax authorities of the company’s VAT return.

E. Date of implementation

The tax will apply to CDS entered into as from August 1, 2012.

V. Amendment of the transfer duties regime for shares

A. Finance Bill for 2012 – reminder

In December 2011, the Finance Bill for 2012 introduced new provisions regarding transfer duties in respect of shares. 3

3 See further the Landwell Tax eAlerts dated December 23, 2011 and January 20, 2012.

(i) Rates

This bill removed the transfer duties cap (€5,000) applicable to the sale of shares of French companies and introduced the following new rates:• 3 percent for the portion of the value below €200,000;

  • 0.5 percent for the portion of the value between €200,000 and €500,000,000 and;
  • 0.25 percent for the portion of the value above €500,000,000.

(ii) Territorial scope

The bill extended the territorial scope of this tax to all sales of listed shares issued by listed companies having their head office in France and that are documented by a written deed, irrespective of whether that deed is executed in France or outside of France.

Therefore, as from January 1, 2012, transfer duties are applicable to sales of listed shares issued by companies:• having their head office in France and that are documented by a written deed, irrespective of whether that deed is executed in France or outside of France; or

• having their head office outside of France and that are documented by a written deed executed in France.

(iii) Exemptions

The bill introduced specific tax exemptions to existing exemptions, notably share buy-backs by the issuing company, transfer of shares in companies placed under a safeguard or receivership procedure, sale of shares between companies that are members of the same tax consolidated group and share-for-share exchanges which fall within the scope of roll-over relief under the EU Merger Directive, as implemented in France.

On February 21, 2012, a ruling (RES 07/2012) published by the French tax authorities brought some clarification regarding the application of these provisions, notably as regard to Repos transactions.

B. Amended Finance Bill for 2012

(i) New rate: 0.1 percent (no capping)

The French Parliament finally decided to maintain the regime amended in December 2011 but has reduced the applicable rate on listed shares to 0.1 percent (no capping).

(ii) Territorial scope unchanged

Please see section V: A(ii) above.

(iii) Change to the exemptions

As of August 1, 2012, the following exemptions will be added to the list of the transactions which are not subject to transfer duties:• transactions subject to the FTT;

  • repurchase by companies of their own shares intended to be sold to the subscribers of a company employee saving plan (PEE);
  • transactions between companies in the same group within the meaning of Article L233-3 of the French Commercial Code – this should cover French and non-French companies;
  • transfer of ownership resulting from a merger, a contribution or a spin-off made under the provisions of Article 210 A and 210 B of the French Tax Code and acquisition of shares of a company by its employees.

Conversely, some share-buy back operations will no longer benefit from the exemption provided by the Finance Bill for 2012.

The changes introduced by the Amended Finance Bill for 2012 will be applicable to sales realised as from August 1, 2012 (to the exception of an amendment in respect of some buy-backs).

The text as amended by the Finance Bill for 2012 remains applicable until then (i.e. between, January 1, 2012 and July 31, 2012).

We expect the French authorities will publish a decree and guidelines relating to these taxes shortly.

 

Forrás

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