France: Financial Transaction Tax (FTT) : Further information and Reminder

26.10.2012

Further to our previous Announcements1 concerning the French law introducing a Financial Transaction Tax (FTT) (the “FTT Law”), we hereby provide and/or remind customers of the below information.

Important dates

From Monday 29 October 2012 (and not 4 November 2012 as previously stated), Clearstream Banking2 customers will be able to upload their FTT declarations via CreationOnline or CreationDirect via Internet for further release to Euroclear France.

Note: All FTT declarations related to the interim period (for transactions settled in August, September and October transactions) should bear November 2012 as payment month (format "201211").

Our testing environment will continue to be available to customers until Friday 9 November 2012.

We highly recommend customers to send their declarations as early as possible ahead of the declaration deadline.

Impacted securities

As set out by the FTT Law, impacted securities are:

  • Capital instruments (“titres de capital”) and assimilated securities (mainly equities);
  • Listed on a French or foreign regulated market;
  • Issued by companies whose:

    • Headquarters are located in France; and
    • Capitalisation exceeds EUR 1 billion on 1 December of the previous fiscal year.

Note: Instruments (such as Depository Receipts) that represent underlying securities that meet the taxation criteria will be in the scope of the FTT as from 1 December 2012, irrespective of where the issuing company is located.

Accountable Parties

An Accountable Party is an institution that is legally obliged to provide the declarations and to pay the FTT. It is:

  • The Investment Service Provider (ISP” that has executed the transaction on its own behalf or on behalf of its client; or
  • In the case of transactions not executed by an ISP, the securities account holder of the investor.

Note: To determine the Accountable Party when the transaction is executed through a chain of ISPs, please refer to the Statement of Practice (§43)3.

Which transactions will be taxed?

Impacted transactions are acquisitions resulting in a transfer of ownership of taxable securities irrespective of where the transaction was negotiated and settled or whether the transaction was executed by the Accountable Party for its own account or following a client order. Our Announcement A12106, dated 1 June 2012, reported the nine possible situations in which transactions are exempted. Among these situations, situation 9 referred to “acquisitions of bonds that can be exchanged for or converted into shares”.

Note: Euroclear France has informed its participants in their updated Detailed Service Description (version 1.2 of October 2012) that the French Tax Authorities have decided to exempt Accountable Parties from the obligation to declare such acquisitions (exemption code 9).

Standard schedule

Under standard rules, the payment of the FTT to Euroclear France is due on the 4th calendar day of the month that follows the month in which the trade settled. If such date falls on a weekend or a bank holiday (that is, a Target 2 closing day), payment will be made on the next business day.

Declaration format

Each declaration is divided into two parts:

  • A header providing the identification of the Accountable Party, the Euroclear France member sending the declaration and the total amount of tax to be paid by such Accountable Party;
  • A list of individual transactions, their details and the relevant individual tax amounts.

Please refer to our Announcement A1248, dated 2 August 2012.

Note: If a declared transaction relates to a net buying position, this must be specified through a specific flag (Netted Transaction flag). If a net buying position is calculated based on transactions with different trade dates, market practice states that the Accountable Party should populate the Trade Date field of their FTT Declaration with the trade date of the majority of the underlying transactions.

All declaration files must be in CSV format with each field separated by a semicolon (;) character.

The file naming convention for input via CreationDirect via Internet is as follows:

  • Input file - the customer declaration as an ASCII text file formatted as CSV with the file name in the following format:
    ftt.decl.CUSTFT.DATE.TIME.csv

    where:

    CUSTFT is the file name defined by the customer.
    DATE is the date the declaration is submitted (YYYYMMDD).
    TIME is the time the declaration is submitted (HHMMSS)
  • Validation file - a status file, based on a validation of the submitted input file, sent to the CreationDirect via Internet "Report" folder.

    • If a declaration is accepted by Euroclear France, the file name is in the following format:

      ftt.decl.faccept.CUSTFT.DATE.TIME.csv
    • If the syntax validation of the file is unsuccessful, either in Clearstream Banking or in Euroclear France, the file name is in the following format:

      ftt.decl.treject.CUSTFT.DATE.TIME.csv

    • If the business content validation of the file is unsuccessful in Euroclear France, the file name is in the following format:

      ftt.decl.freject.CUSTFT.DATE.TIME.csv

    where, in all cases:

    CUSTFT is the file name defined by the customer.
    DATE is the date the declaration feedback is submitted.
    TIME is the time the declaration feedback is submitted.

Requirements and recommendations

It is the responsibility of the customer to fulfil all applicable requirements that result from the introduction of the FTT Law. In particular, customers must ensure their compliance with any applicable obligation to collect the relevant transaction data requested by the FTT Law as of 1 August 2012 for impacted French securities as well as to proceed with the payment of the tax.

In order to comply with applicable requirements of the FTT Law, customers are strongly recommended to secure the advice and guidance of a professional tax advisor.

Disclaimer

This Announcement is provided for information purposes only and does not aim to give any legal or tax advice. Clearstream Banking strongly recommends that customers assess whether and how their business is impacted by the FTT Law.

Clearstream Banking makes no guarantees, representations or warranties and accepts no responsibility or liability as to the veracity, accuracy or completeness of this document and under no circumstances will be liable for any loss or damage caused by reliance on any opinion, advice or statement made in this document.

Further information

The information herein provided is based on information currently available in the market and is subject to further update. The release of more information may impact the details presented herein. We will provide further details as they become available.

For further information, customers may contact their Clearstream Banking Customer Service or Relationship Officer.

1. All our published Announcements related to the French FTT can be found together in the Information Centre on our website.
2. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in the Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking, société anonyme, registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).
3. The final version of the statement of practice, under no. BOI 3 P-3-12, subsequently codified under no. BOI-TCA-FIN-10-20120912 (the “Statement of Practice”).

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