Concerns expressed after amendments to French FTT
The French National Assembly has voted proposed amendments to the local financial transaction tax (FTT) on 19 October 2016 while discussing the Projet de loi de finances (French government draft budget law) for 2017.
The tax’s rate has been increased by 0.1%, to 0.3% from 0.2% of the amount of the financial transactions targeted by the measure implemented in 2012.
Also intra day transactions, including high frequency trading, have been included into the scope of the tax.
Those amendments aim to boost France’s public development aid. It is estimated that the French FTT raises over €1bn annually.
In addition, another change voted on 19 October is set to tax like any revenue free shares granted by France-based companies to their employees and to apply a 10% rise on employers’ contributions, passing to 30% from 20%.
Yet the tax and legal regime of free shares has been softened by the loi Macron (Macron law) adopted on 6 August 2015.
A number of players from the financial sector, among which the French asset management association AFG and the AFIC representing French private equity investors, have expressed concerns over France’s competitivity following the adoption of the amendments.
In a joint statement, AFG and AFIC said the rise of the FTT’s rate would mainly impact the stock markets and assessed the taxation of intra day transactions would result in a brake to capital investments in listed companies on Euronext.
They added that the vote of those amendments sends wrong signals to the worldwide financial community and shows how instable the French tax system is.
Moreover, AFG and AFIC regret the amendments hurt the action recently engaged by the Paris financial place to welcome asset management companies that would consider relocating to Paris for business activities in the European Union.