France: Update on the French Financial Transaction Tax (FTT)
Since March 2012, we have released regular Announcements1 to keep customers informed about the new French Financial Transaction Tax (FTT) that became effective on 1 August 2012.
The content of the current Announcement is to be read as complementary information, particularly with regard to Announcement A12127/D12035, dated 3 July 2012.
The first customer reporting, for all the acquisitions (of any size) resulting in a transfer of ownership of taxable securities that have settled in August, September and October, is due to be sent to Clearstream Banking2 by
9 November 2012, 09:00 CET
From November onwards, the reporting must be sent to us by the 4th calendar day of the payment month, 09:00 CET.
Note: The administrative guidelines promised by the French Ministry of Finance and the French Tax Authorities are not yet available. Any assessment of the obligations of any institution in relation to the FTT must therefore be provisional. The information is expected to be published shortly and we provide a list of available and soon to be published/updated documents in the zip file attached to this Announcement.
The following sections focus on new developments since 3 July 2012, omitting known and unchanged details, to be understood in conjunction with our previous Announcements.
Tax rate increased
The proposal to increase the FTT rate from 0.1% to 0.2% has been approved by both the National Assembly and the Senate and it is therefore most likely that the 0.2% rate will be applicable retroactively from 1 August 2012.
Impacted securities
The French Ministry of Finance published the official list of 109 impacted French companies on 13 July 2012. Our Announcement A12139, dated 23 July 2012, included the unofficial list of companies, together with the respective ISIN codes, that would be impacted by the implementation of the FTT.
The criteria applied by the law to define impacted securities were as follows:
- 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 whose capitalisation exceeds EUR 1 billion on 1 January of the underlying fiscal year.
Note: Both the National Assembly and the Senate have approved the amendment to shift the date for assessing market capitalisation from 1 January to 1 December of the previous year.
An amendment designed to include foreign certificates representative of French shares (such as American and European depository receipts) has been adopted by the Senate. If also adopted by the National Assembly, this measure will apply to transactions as of 1 December 2012.
Following the decision to postpone to 1 December 2012 the application of the FTT to depository receipts for the concerned French companies, the American Depository Receipt (ADR) agents have decided to lift the temporary closure3 of the books for ADR issuances, cancellations and transfers of ADR programmes of those companies.
Service offered by Clearstream Banking
As direct members of Euroclear France, CBL and CBF will give customers the possibility to report taxable and exempted acquisitions. Each valid declaration will be immediately reported to Euroclear France.
A number of validation checks will be performed by Clearstream Banking. The report format included in the attached zip file provides updated information (marked in red) about the content of the declaration and the validation feedbacks that will be sent by Clearstream Banking and Euroclear France.
For the detailed declaration processing, please refer to our Announcement A12127.
Each declaration will refer to only one Accountable Party as defined by the law. It will not be possible for customers to send a single declaration for multiple Accountable Parties and a declaration may contain data pertaining to only one account at Euroclear France.
Also:
- For positions held on CASCADE, the field “ID 1 - Institution code” of the declaration must be filled with CBF’s account number at Euroclear France (607).
- For positions held on Creation (which also includes CBF positions on 6-series Creation accounts), the field must be filled with CBL’s account number at Euroclear France (641).
- From 30 July 2012 onwards, CBF will provide a respective flag in WSS based on the flagging of WM.
Connectivity media
In order to submit FTT declarations in CSV format, as required by Euroclear France, and to receive feedbacks provided by Clearstream Banking and Euroclear France, customers will be able to use the following connectivity media:
CreationOnline
From 15 October 2012, a new French tax business service will be available in CreationOnline to enable customers to upload FTT declarations in CSV format and to view the resulting validation feedbacks from Clearstream Banking and Euroclear France. The feedback will also be available for download. By default, the new service will automatically be available to all Organisational Units (OUs) that have Securities Input and Tax Services permissions. In addition, OU Administrators may also grant or deny the specific permission at User level.
Each FTT declaration submitted to Clearstream Banking must specify the Clearstream Banking account from which taxes will be debited. This account will be validated and must be linked to the customer’s OU.
CreationDirect via Internet
From 15 October 2012, FTT declarations in CSV format can be submitted using CreationDirect via Internet where the CreationDirect filestore has the requisite input privileges. Negative validation feedbacks from Clearstream Banking, as well as negative and positive validation feedbacks from Euroclear France, will be posted in the Report folder.
FTT declarations submitted to Clearstream Banking via CreationDirect must also specify the Clearstream Banking account from which taxes will be debited. This account will be validated and must be linked to the CreationDirect filestore.
Important notes:
- Contrary to what was initially announced, CreationDirect via VPN and CreationDirect via SWIFT FileAct will not be supported.
- CBF customers are also required to use these connectivity channels; no parallel service will be available on the CASCADE platform.
- In order to use the new service, customers must have access to either CreationOnline and/or CreationDirect via Internet. If this is not yet the case, customers should urgently contact our specialised connectivity desks:
| Luxembourg | Frankfurt - ICSD Support (Creation) | |
| Email: | connectlux@clearstream.com | connectfrankfurt@clearstream.com |
| Telephone: | +352-243-38110 | +49-(0) 69-2 11-1 1580 |
| Fax: | +352-243-638110 | +49-(0) 69-2 11-61 1580 |
Corporate actions
Only corporate events of the specified 109 companies (A12138 Eligible Companies) and their related ISINs are relevant for the FTT.
The corporate action types and the related possible exemption types to be entered in the FTT declarations are described in the attached Corporate Actions spreadsheet.
The effective date for the FTT to be applied on a corporate action event is 1 August 2012. The information about FTT on corporate events provided in the spreadsheet is still provisional and subject to change. We will provide definitive information as soon as it becomes available.
Disclaimer
This Announcement does not aim to give any legal or tax advice and Clearstream Banking strongly recommends that customers assess whether and how their business is impacted by the French FTT. Customers who are active in major French securities may need to start collecting the relevant transaction data as of 1 August 2012.
It is the responsibility of Clearstream Banking customers to fulfil all requirements that result from the introduction of the French FTT and customers acting on behalf of their clients should analyse whether and how to support the processing of the FTT for their clients.
In order to comply with all the requirements of the law, customers are requested, before instructing an actual transaction, to secure the advice and guidance of a professional tax advisor who is familiar with the relevant facts.
Further information
The release of more information may impact the information provided herein. We will provide further details as they become available.
For further information, customers may also contact their Clearstream Banking Customer Service or Relationship Officer.
A list of documents that may be of interest to customers is provided in the attached zip file; the documents can be found on the respective websites.
1. All our FTT related Announcements published to date are: A12057, L12006, L12013, L12014, L12017, L12022, L12023.
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 temporary closure, effective from close of business (New York Time) 31 July 2012, was the subject of our Marketflash M12038, dated 31/07/2012.