France: Financial Transaction Tax (FTT) : SOP and latest list of impacted securities
With reference to our previous Announcements1 concerning the French law introducing a Financial Transaction Tax (FTT) (the “FTT Law”)2, we hereby inform customers of the additional clarifications provided by the Statement of Practice (SOP), published on 3 August 2012, and include the latest list of impacted securities (provided in a zip file attachment to this Announcement).
Eligible securities
- Within the scope of the FTT are:
Investment certificates, voting right certificates and certificates representative of French shares (for example, American Depository Receipts (ADRs)) issued by entities, regardless of their location.
Note: With respect to certificates representative of French shares, it is indicated that the FTT will apply to acquisitions realised as of 1 December 2012. - Out of scope are:
Acquisitions of UCITS units (FCP and SICAV), including ETFs and acquisitions of financial contracts (options, futures, warrants).
These instrument types are not considered as “equity instruments” under the French Monetary and Financial Code.
Temporary disposals and corporate action events
As of 1 January 2013 (instead of 1 August 2012), the following will be reportable:
- Temporary sales (for example, repo transactions), which are FTT-exempt;
- Corporate Action events resulting in the issuance of new shares.
Note: The postponement is a result of lobbying efforts from French market participants.
Collateral
Taxable securities provided as collateral within the meaning of article L.211-38 of the French Monetary and Financial Code are not considered as a taxable acquisition, including cases where the guarantee constituted by the collateral is exercised as a result of the debtor’s failure and the securities are definitely acquired by the credit party.
When taxable securities are provided as collateral for either a securities lending transaction or a sale and repurchase agreement and such guarantee is exercised (due to the failure of the debtor), resulting in securities being definitely acquired by the credit party, such acquisition is FTT-exempt.
Value Added Tax (VAT)
The amount of FTT will not be subject to a surcharge of VAT.
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 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 herein presented. We will provide further details as they become available.
For further information, customers may also contact Clearstream Banking3 Customer Service or their Relationship Officer.
1. All our FTT related Announcements published to date are: A12057, A12106/D12028, A12121/D12034, A12127/D12035, A12131/D12036, A12138/D12037, A12139/D12039, A12147/D12041.
2. Loi n°2012-354 du 14 mars 2012 de finances rectificative pour 2012, available at www.legifrance.gouv.fr/. The FTT Law is currently being amended. The draft amendment bill has been voted on but not yet published. Please also refer to our Announcement A12131/D12036.
3. 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).
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