France: Financial Transaction Tax (FTT) - Frequently asked questions
Which transactions and securities are subject to the FFTT?
The French FTT is applicable on the acquisitions of shares traded on a regulated market (French or foreign) issued by French entities (Headquarters are in France) with a market capitalisation of more than EUR 1 billion on 1 December of the previous year (acquisitions may also result from corporate actions).
Only acquisitions are taxed, while sales are not in scope. The list of French companies with a market capitalisation value on 1 December of each year greater than EUR 1 billion will be published before 31 December of the same year of the same year on the FTA's website.
The acquisition of the underlying shares upon exercise/exchange of options, derivatives financial instruments conversion of the bonds or other marketable securities may trigger the FTT if the shares delivered are not newly issued (the acquisition of newly issued shares benefit from another exemption).
Some corporate actions may lead to acquisitions that are in the scope of the FTT.
What should be reported?
For the purpose of the French FTT, the taxable person should report and declared both taxable and exempted acquisitions. For exempted transactions, the Accountable Party must provide the exemption reason as foreseen by the Law.
What are the tax rate and the tax base for this French FFTT?
Effective January 1, 2017, the tax rate is set at 0.3%.
The tax base is the acquisition value of the French Equity (excluding transaction fees) on the settlement date (legal transfer of ownership to the buyer).
Where purchases and sales of the same French Equity are carried out in the same day (or month where the deferred settlement system is applicable), only the net daily (or monthly) balance is recorded in the buyer's securities account. Only the net balance of taxable transactions is in this case (Intra-day transactions) subject to the French FTT.
The tax base is based on the strike price established in the contract when the acquisition derives from the exercise of a derivative contract.
The tax base is based on the price established in the bond indenture, when the acquisition derives from the conversion, redemption, or exchange of a bond.
When is the settlement of the transactions considered to have occurred for the purposes of the settlement of the tax?
The default settlement date is the actual settlement date, except if the Accountable Party has opted for the use of the intended settlement date option. The Accountable Party must notify Euroclear France and the French Tax Authorities that they will use this option before the 25th of the month preceding the first applicable transaction.
Where can customers find the declaration template to be filled in?
The FTT declaration template is available in the “Attachments” of the France: Financial Transaction Tax page.
How should customers complete the declaration(s) template?
As a general requirement,
- Customers shall provide one FTT declaration per taxpayer and shall specify the Euroclear France Member code where the trade is executed. Declarations for multiple taxpayers or for multiple Euroclear France Member codes are not accepted by Euroclear France.
- Both taxable and exempted acquisitions must be declared. For exempted transactions, the taxpayer shall provide the exemption reason (one of the nine reasons foreseen by the Law). If the Customer does not provide an exemption reason, the transaction shall be considered as taxable by Clearstream Banking.
- The FTT declaration template specify the fields which are impacted by corporate actions and the rules that apply to these fields.
What is the deadline for customers to send their declaration(s)s to Clearstream Banking?
Customers shall send the FTT declaration(s) to Clearstream Banking via the communication media indicated (Creation Direct or Xact Web Portal) before 09:00 CET on the 4th calendar day of the month, following the month in which the reportable transfer was settled.
A yearly French FTT calendar will be published by Clearstream Banking, detailing the exact deadlines for each submission month.
How will Clearstream Banking process customer’ standard declaration file(s)?
When customers submit their FTT declaration(s), Clearstream Banking will perform a number of validations checks and the validation feedback is immediately provided to the Customer via Authenticated Message. The FTT declaration(s) will be considered as valid from Clearstream Banking’s point of view if the complete FTT declaration(s) has successfully passed all validations checks. If valid, the FTT declaration(s) will be immediately forwarded to Euroclear France.
Euroclear France will, in turn, report to Clearstream Banking the acceptance or rejection of the FTT declaration(s). Euroclear France’s validation feedback will be forwarded to the Clearstream Banking customer via Authenticated Message.
Any FTT Declaration rejected by Clearstream Banking and/or Euroclear France will have to be resubmitted to Clearstream Banking with a new declaration reference.
On the payment date (4th calendar day of the month or next business day, if it falls on a weekend or bank holiday) Clearstream Banking will debit customer accounts with the total tax amount mentioned on each FTT Declaration that successfully passed Clearstream Banking’s validations and for which Euroclear France has sent a positive FTT Status message:
- If the debit is successful, Clearstream Banking will transfer the total tax amount on behalf of the customer to Euroclear France.
- If the debit fails, the declaration files will not be rejected but rather recycled for 60 days, meaning that Clearstream Banking will transfer the total tax amount on behalf of the customer to Euroclear France on the next business day following the day on which the debit is successfully settled.
After the first failed debit, customers will be automatically notified via the defined communication channel as a reminder to fund their account with the FTT amount before the end of the 60-day recycling period.
After 45 days, and if the debit is still pending, customers will be automatically notified via the defined communication channel (MT940 or Xact Web Portal). Clearstream Banking encourages customers to fund their account with the FTT amount as soon as they receive such notification.
After 60 days, Clearstream Banking will stop recycling the declaration(s) pending debit, without any further notice to customers. If customers have a declaration(s) pending debit after the end of the 60-day recycling period, then customers should contact Clearstream Banking Client Services or their Relationship Officer to find an arrangement and pay the FTT amount accordingly.
Customers will be liable for late payment interests if they do not pay the FTT amount in due time. The late payment interests will be claimed and charged directly by the Tax Authorities to the taxpayer named in the FTT return, with no involvement from Clearstream Banking.
Clearstream Banking therefore advises its customers to fund their accounts with the amount declared in due time when sending their declaration files.
How will Clearstream Banking process customer’s late declaration(s) file(s)?
For late FTT declaration(s) that successfully passed Clearstream Banking’s validations and for which Euroclear France has sent a positive FTT Status message, Clearstream Banking will initiate the tax payment immediately in favor of Euroclear France without waiting for the next scheduled payment date, as follows:
• For late and valid declaration(s)s received before 09:00 CET on a given date, Clearstream Banking will debit customer accounts on the same date with the total of the tax amounts mentioned on each FTT Declaration(s):
- If the debit is successful, Clearstream Banking will transfer the Total Tax Amount on behalf of the customer to Euroclear France.
- If the debit fails, the declaration(s) files will be recycled, for a maximum of 60 days, and Clearstream Banking will transfer the Total Tax Amount on behalf of the customer to Euroclear France on the next business day following the day on which the debit settled.
• For late and valid declaration(s)s received after 09:00 CET on a given date, Clearstream Banking will debit customer accounts on the business day that immediately follows the receipt of the late and valid FTT Declaration(s)s:
- If the debit is successful, Clearstream Banking will transfer the Total Tax Amount on behalf of the customer to Euroclear France.
- If the debit fails, the declaration(s) files will be recycled, for a maximum of 60 days, and Clearstream Banking will transfer the Total Tax Amount on behalf of the customer to Euroclear France on the next business day following the day on which the debit settled.
After the first failed debit, customers will be automatically notified via the defined communication channel as a reminder to fund their account with the FTT amount before the end of the 60-day recycling period.
After 45 days, and if the debit is still pending, customers will be automatically notified via the defined communication channel (MT940 or Xact Web Portal). Clearstream Banking encourages customers to fund their account with the FTT amount as soon as they receive such notification.
After 60 days, Clearstream Banking will stop recycling the declaration(s) pending debit, without any further notice to customers. If customers have a declaration(s) pending debit after the end of the 60-day recycling period, then customers should contact Clearstream Banking Client Services or their Relationship Officer to find an arrangement and pay the FTT amount accordingly.
Customers will be liable for late payment interest if they do not pay the FTT amount in due time. The late payment interests will be claimed and charged directly by the Tax Authorities to the taxpayer named in the FTT return, with no involvement by Clearstream Banking.
Clearstream Banking therefore advises its customers to fund their accounts with the amount declared in due time when sending their declaration files.
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 the related processing costs as follows,
- If the late payment is credited to Euroclear France after the 4th but 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 charge the customer accordingly and the customer authorises Clearstream Banking to debit its account with the same value date for any amounts charged to Clearstream Banking because of the customer’s late payment.
The Tax Authorities require Euroclear France to report all late declarations and late payments. Indemnities, penalties or interests foreseen by the FTT Law against the taxpayer may be claimed and raised directly by the Tax Authorities to the taxpayer without Clearstream Banking's involvement.
What are the potential penalties, surcharges, or late payment interests?
Penalties such as increases in the tax owed and flat fines per monthly report are incurred by a taxpayer if there is:
- Failure to transmit the necessary information allowing the central depositary to collect the French FTT;
- Late transmission of such information;
- Inaccuracy or omission found in the information provided.
Customers will be liable for any late interest penalty if they fail to pay the FTT amount. The late interest penalty will be claimed and raised directly by the Tax Authorities to the taxpayer referenced in the FTT declaration(s), without Clearstream Banking being involved.
What should customers do if they decide to outsource their reporting activities?
Customers that outsource their reporting activities may have their declaration file(s) rejected since the existing FTT PoA (Power of Attorney) agreement with a third party does not include the permission to upload French FTT declaration(s).
Customers who want to enable the upload of French FTT declaration(s) via a FTT dedicated PoA should contact their Relationship Officer to obtain the relevant documents. The FTT dedicated PoA must be signed and returned to Clearstream Banking.
Can customers share the Clearstream Banking declaration(s) template with their underlying clients?
The Clearstream Banking declaration(s) creator (Excel template for declaration(s)) can be distributed to the underlying clients. However, the template is protected so they would not be able to edit it. Clearstream Banking should receive the declaration(s) from the customers and not from the underlying clients of the customers.