A new law creating a 0.1% financial transaction tax (FTT) was adopted by the French Parliament and will come into effect for all transactions that have been traded and settled as from

1 August 2012

This information below complements our Announcements A12057, A12106 and A12121 and provides the technical information that will enable Clearstream Banking¹ customers to report both taxable and exempted acquisitions and to fulfil their payment obligations to the French Tax Authorities.

1) Which transactions are to be reported?

Impacted transactions are large acquisitions resulting in a transfer of ownership of taxable securities no matter 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.

The law has foreseen nine different cases where acquisitions would be exempted. These exempted transactions must also be reported to the French Tax Authorities.

2) Who should report the taxable and exempted acquisitions?

CBL and CBF are direct members of Euroclear France and will deliver tax declarations and payments directly on behalf of the Accountable Party. This is applicable in cases where Clearstream Banking is the last intermediary in the chain from an Accountable Party to Euroclear France and where there are not more than two intermediaries in such chain.

3) When are taxable and exempted acquisitions to be reported

Transactions that have been traded and settled as from Wednesday, 1 August 2012, are taxable. Under standard rules, the FTT is due to the French Tax Authorities on the 4th calendar day of the month following the acquisition (or, if that is a bank holiday, on the next business day). However, to allow for a progressive adaptation by the market, the law has foreseen an interim schedule that will precede the standard schedule for declaring and paying the FTT.

• Interim schedule:
  
  Reporting of taxable transactions for the months of August, September and October must be delivered to Clearstream Banking by 9 November 2012, 09:00 CET.
  
• Standard schedule:
  
  From November 2012 onwards, the reporting of taxable transactions must be delivered to Clearstream Banking by the 4th calendar day of the payment month, 09:00 CET.

4) Declaration processing

Customers will have the possibility to send a single monthly declaration before the above deadline or several declarations throughout the month of acquisition.

Each taxable declaration will only refer to one Accountable Party as defined by the law; it will not be possible for our customers to send a single declaration relating to multiple Accountable Parties.

A number of validation checks will be performed by Clearstream Banking on the received declarations and a validation feedback will be immediately provided to the customers (see attached document in point 10 below). A declaration will be considered as valid from Clearstream Banking’s point of view if the complete declaration has successfully passed all validation checks.

Any rejected tax declaration will have to be re-submitted to Clearstream Banking with a new declaration reference.

Each valid declaration will be immediately released to Euroclear France who, in turn, will report to Clearstream Banking the acceptance or rejection of the declaration. Euroclear France’s validation feedback will be forwarded to our customers (see attached document in point 10 below). Any tax declaration rejected by Euroclear France will have to be re-submitted to Clearstream Banking with a new declaration reference.

Euroclear France will perform ex post checks after receiving customers’ declarations. These checks may not lead to the rejection of your declarations. Based on Euroclear France’s reports, the tax authorities may consult the details of the declarations and decide to apply the penalties foreseen by the law for missing or incomplete information. These penalties will be claimed and raised directly by the tax authorities to the Accountable Party referenced in the declaration without Clearstream Banking involvement.

5) Communications media

In order to submit FTT declarations in CSV format as required by Euroclear France and to download feedback provided by Euroclear France, customers will have the choice of several communications media:

CreationOnline

A French tax business service will be available to enable the upload of FTT declarations in CSV format and to view the validation from Clearstream Banking (as currently available for Securities – Create Upload).

The resulting feedback from Euroclear France will then be available for download. The new service will be available to all customer Organisational Units (OUs) that have Securities Input permissions. OU Administrators may also grant or deny a specific privilege at User level.

CreationDirect via Internet

FTT declarations in CSV format can be submitted if the CDI Filestore has Securities Input privileges. Negative and positive validation feedbacks from Clearstream Banking and Euroclear France will be posted in the Report folder.

CreationDirect via VPN

Customers with Securities Input privileges will also have the possibility to send FTT declarations in CSV format. Negative and positive validation feedbacks from Clearstream Banking and Euroclear France will be transmitted back to customers.

CreationDirect via SWIFTNet FileAct

Customers with Securities Input privileges will also have the possibility to send FTT declarations in CSV format. Negative and positive validation feedbacks from Clearstream Banking and Euroclear France will be transmitted back to customers.

6) Late declaration processing

A late declaration is defined as one that Clearstream Banking has received after the above-mentioned Clearstream declaration deadline.

The same validation checks will be performed on late declarations, which, if valid, will be immediately released to Euroclear France.

In cases of late reporting, Clearstream Banking customers must complete any late declaration within the original payment month (even in the past). A late declaration must only include transactions with the same settlement month; no mixed declarations will be accepted. This applies to Standard transactions not to Refunds, Regularisations or Amendments.

7) Standard payment processing

Clearstream Banking requests its customers to send all tax declarations before 09:00 CET on the 4th calendar day of the month following the acquisition. On the 4th calendar day of the month (or on the next business day if it is a bank holiday), Clearstream Banking will debit its customers with the total tax amount mentioned on each declaration. Clearstream Banking will then consolidate all total tax amounts reported by all customers and release one global payment in favour of Euroclear France.

8) Late payment processing

In cases of valid but late declarations, Clearstream Banking will initiate the tax payment immediately in favour of Euroclear France without waiting for the next scheduled payment date, as follows:

• In cases of late and valid declarations received before 09:00CET on the 4 calendar day of the month, Clearstream Banking will debit its customers on the 4th calendar day of the month (or the next business day if it is a bank holiday) with the total of the tax amounts mentioned on each declaration. On the same date, a global payment consolidating all late tax amounts will be released in favour of Euroclear France.
  
• In cases of late and valid declarations received after 09:00 on or after the 4th calendar day of the month, Clearstream Banking will debit its customers on the day that immediately follows the receipt of the late declaration (or the next business day if it is a bank holiday) and release, on the same date, a global payment consolidating all late tax amounts in favour of Euroclear France.

It is important to mention that, if a late declaration results in a late payment to Euroclear France, Euroclear France will charge Clearstream Banking for the corresponding loss of interest amounts and, as the case may be, to cover the related processing costs.

• If the late payment is credited to Euroclear France after the 4th and before the 24th calendar day of the payment month, Euroclear France will charge Clearstream Banking for the actual number of days of delay (20 days maximum).
  
• If the late payment is credited to Euroclear France on or after the 24th calendar day of the payment month, Euroclear France will invoice Clearstream Banking for 20 days.

Clearstream Banking will debit its customers with these extra charges with the same value date as applied by Euroclear France.

The tax authorities have required Euroclear France to report all late declarations and late payments. Indemnities, penalties or interest foreseen by the law against the Accountable Party will be claimed and raised directly by the tax authorities to the Accountable Party without Clearstream Banking involvement.

9) Update processing

It will be possible for Clearstream Banking customers to perform updates of transactions already declared. The message format will be the same as for standard transactions. The update process will be managed through the use of specific values of the “type of transaction” field (field 15 of the declaration) (see attached document in point 10 below).

Customers will be able to send, within the same declaration, standard transactions and updates of transactions already declared. They will be authorised to net standard transactions and refunds so as to be reimbursed without having to send a separate claim to the tax authorities.

As long as the total tax amount remains as a debit, the declaration will follow the standard process. If the total amount of the declaration becomes a credit, Euroclear France will inform the tax authorities on the 24th calendar day of the payment month. The Accountable Party must liaise with the tax authorities directly to be refunded with such credits without Clearstream Banking involvement.

10) How to report the taxable and exempted acquisitions

Clearstream Banking customers will use this message to send an FTT declaration to Euroclear France. Enclosed will be:

• The message details with all mandatory information to be reported for each Accountable Party separately;
• Clearstream Banking validation feedback via CreationOnline, CreationDirect;
• Euroclear France’s validation feedback.

Each declaration will be divided into two parts:

• A header providing the identification of the Accountable Party, the total tax amount;
• A list of individual transactions, their details and the relevant individual tax amount.

These declarations will be sent in CSV format with a “;” as a separator.

An FTT reporting template (spreadsheet) is attached as a zip file below.

11) Testing strategy and customers readiness

Clearstream Banking testing platform will be available to its customers to test the FTT process in the course of September-October. Further detailed information will follow in due course.

12) What customers need to do

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 new French FTT. Customers who are active in major French securities may need to start collecting the relevant transaction data as of 1 August 2012.

Clearstream Banking therefore 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.

It is the responsibility of the Clearstream Banking customer 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 new 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 information herewith provided is based on information currently available on the market. Further information will be released in the future and may impact the process herewith described. Customers will be kept informed as the information becomes available on the market.

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

1. 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).

As a registered customer, subscribe to our free email alerts service to receive immediate, daily and/or weekly notification of the latest customer publications on our website. Unsubscribe at any time; we respect your email privacy.