French General Tax Code
In forceI.-A tax applies to any acquisition for consideration of a capital security, within the meaning of Article L. 212-1 A of the Monetary and Financial Code, or an equivalent capital security, within the meaning of article L. 211-41 of the same code, provided that this security is admitted to trading on a French, European or foreign regulated market, within the meaning of articles L. 421-4, L. 422-1or L. 423-1 of the said code, that its acquisition gives rise to a transfer of ownership, within the meaning of Article L. 211-17 of the same code, and that this security is issued by a company whose registered office is located in France and whose market capitalisation exceeds one billion euros on 1 December of the year preceding that of taxation.
Acquisition, within the meaning of the first paragraph, means the purchase, including in the context of the exercise of an option or in the context of a forward purchase that has previously been the subject of a contract, the exchange or the allocation, in return for contributions, of equity securities mentioned in the same first paragraph.
Securities representing those mentioned in the said first paragraph issued by a company, regardless of where its registered office is established, are subject to the tax.
II.-The tax is not applicable:
1° To purchase transactions carried out as part of an issue of equity securities, including when this issue gives rise to an underwriting and guaranteed placement service, within the meaning of Article L. 321-1 of the Monetary and Financial Code;
2° Transactions carried out by a clearing house, within the meaning of article L. 440-1 of the same code, as part of the activities defined in that same article L. 440-1, or by a central depositary, within the meaning of 3° of II of Article L. 621-9 of the said code, as part of the activities defined in the same Article L. 621-9;
3° Acquisitions made as part of market-making activities. These activities are defined as the activities of an investment firm or a credit institution or an entity from a foreign country or a local company that is a member of a trading platform or a market in a foreign country when the firm, institution or entity concerned carries out transactions in a financial instrument as an intermediary acting as a party, within the meaning of l'article L. 211-1 of the same code:
a) Either to the simultaneous communication of firm and competitive bid and offer prices of comparable size, with the result of providing liquidity to the market on a regular and continuous basis;
b) Or, as part of its usual business, to the execution of orders given by clients or in response to requests from them to buy or sell;
c) Or to the hedging of positions associated with the execution of the transactions referred to in a and b ;
4° Transactions carried out on behalf of issuers with a view to promoting the liquidity of their shares under accepted market practices accepted by the Autorité des marchés financiers pursuant to Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC ;
5° Acquisitions of securities between companies belonging to the same group, within the meaning of article L. 233-3 of the French Commercial Code, at the time of the acquisition of securities concerned, to acquisitions of securities between companies in the same group, within the meaning of article 223 A or article 223 A bis of this code, and acquisitions occurring under the conditions provided for in articles 210 A, 210 B, 220 quater, 220 quater A and 220 quater B;
6° To temporary transfers of securities referred to in 10° of Article 2 of Commission Regulation (EC) No 1287/2006 of 10 August 2006 implementing Directive 2004/39/EC of the European Parliament and of the Council as regards record-keeping obligations for investment firms, transaction reporting, market transparency, admission of financial instruments to trading, and defined terms for the purposes of that Directive ;
7° Acquisitions, under Book III of Part Three of the Labour Code, of equity securities by company investment funds governed by Articles L. 214-164 et L. 214-165 of the Monetary and Financial Code and by employee shareholding open-ended investment companies governed by article L. 214-166 of the same code as well as acquisitions of shares in the company or in a company in the same group, within the meaning of articles L. 3344-1 and L. 3344-2 of the Labour Code, directly made by employees pursuant to the seventh paragraph of article L. 3332-15 of the same code;
8° Buybacks of their equity securities by companies when these securities are intended to be sold to members of a company savings plan under Title III of Book III of Part Three of the Labour Code;
9° Purchases of bonds exchangeable or convertible into shares.
III.- The tax is based on the value of the securities purchased.The tax is based on the acquisition value of the security. In the event of an exchange, in the absence of an acquisition value expressed in a contract, the acquisition value corresponds to the quotation of the securities on the most relevant market in terms of liquidity, within the meaning of Article 9 of the aforementioned Commission Regulation (EC) 1287/2006 of 10 August 2006, at the close of the trading day preceding that on which the exchange takes place. In the event of an exchange between securities of unequal value, each party to the exchange is taxed on the value of the securities it acquires.
IV.-The tax is payable on the first day of the month following that in which the acquisition of the security occurred.
V.-The rate of the tax is set at 0.3%.
VI.-The tax is liquidated and due by the operator providing investment services, within the meaning of Article L. 321-1 of the Monetary and Financial Code, having executed the order to purchase the security or having traded on its own behalf, regardless of its place of establishment.
When several operators mentioned in the first paragraph of this VI are involved in executing the order to purchase a security, the tax is liquidated and due by the one that receives the purchase order directly from the final purchaser.
When the acquisition takes place without the intervention of an operator providing investment services, the tax is liquidated and due by the institution providing the custody account-keeping function, within the meaning of 1 of Article L. 321-2 of the same code, regardless of where it is established. The acquirer shall provide it with the information referred to in VIII of this article.
VII.If the central depository holding the account for the issue of the equity security is subject to 3° of II of Article L. 621-9 of the Monetary and Financial Code and makes delivery of the security, the party liable for payment mentioned in VI of this article shall provide the central depository with the information mentioned in VIII before the 5th of the month following the acquisitions mentioned in I and shall designate the member from whose account the tax may be deducted.
If the central depository holding the account for the issue of the capital security is subject to 3° of II of Article L. 621-9 of the Monetary and Financial Code and does not deliver the security, which is done in the books of one of its members, that member shall provide the central depository with the information mentioned in VIII of this article before the 5th of the month following the acquisitions mentioned in I.
If the central depository holding the account for the issue of the equity security is subject to 3° of II of Article L. 621-9 of the Monetary and Financial Code and neither this depository nor any of its members makes delivery of the security, which is carried out on the books of a client of a member of the central depository, this client provides the information mentioned in VIII of this article to the member, which sends it to the central depository before the 5th of the month following the acquisitions mentioned in I.
If the central depository holding the account for the issue of the capital security is subject to 3° of II of Article L. 621-9 of the Monetary and Financial Code and the delivery is made under conditions other than those mentioned in the first three paragraphs of this VII, the party liable for payment mentioned in VI shall declare to the tax authorities, in accordance with the model set by them, and pay to the Treasury the tax before the 25th of the month following the acquisitions mentioned in I. The taxpayer may also pay the tax through a member of the central depository, to whom he sends, directly or indirectly, the information mentioned in VIII. The member sends this information to the central depository before the 5th of the month following the acquisitions referred to in I. If the taxpayer opts to pay the tax through a member of the central depository, he must inform the Treasury by means of a declaration before 1st November. This declaration is valid for one year and is renewed by tacit agreement.
If the central depository holding the account for the issue of the capital security is not subject to 3° of II of Article L. 621-9 of the Monetary and Financial Code, the taxpayer referred to in VI of this article declares to the tax authorities, in accordance with the model set by the tax authorities, and pays the tax to the Treasury before the 25th of the month following the acquisitions referred to in I. It shall make the information referred to in VIII available to the tax authorities.
VIII.-If the central depository holding the account for the issue of the capital security is subject to 3° of II of Article L. 621-9 of the Monetary and Financial Code, it shall collect information from its members or from the taxpayers, under the conditions set out in VII of this article, relating to transactions falling within the scope of the tax. A decree shall specify the nature of this information, which shall include the amount of tax due in respect of the tax period, the serial numbers of the transactions concerned, the date on which they were carried out, the description, number and value of the securities whose acquisition is taxable and the exempt transactions, broken down according to the categories of exemption mentioned in II.
IX.-The central depository holding the account for the issue of the security subject to 3° of II of Article L. 621-9 of the Monetary and Financial Code shall declare to the tax authorities, in accordance with the model it has set, centralise and pay to the Treasury the tax before the 25th of the month following the acquisitions mentioned in I of this article. The declaration shall specify in particular the amount of tax due and paid by each taxpayer.
In the cases mentioned in the first three paragraphs of VII or in the event of an option by the taxpayer mentioned in the penultimate paragraph of the same VII, the member who has transmitted the information mentioned in VIII or who has been designated by the taxpayer pursuant to the first paragraph of VII authorises the taxpayer to deduct the amount of tax from his account before the 5th of the month following the acquisitions mentioned in I.
X.-The central depository subject to 3° of II of Article L. 621-9 of the Monetary and Financial Code shall keep separate accounts for recording transactions relating to the collection of the tax. It shall ensure that the declarations it receives are consistent with the information in its possession as central depositary. The information gathered by the central depository pursuant to VII of this article is made available to the administration upon request. An annual report shall be submitted to the authorities on the nature and extent of the controls implemented. A decree shall define the terms and conditions for the application of this X.
XI.-In the event of failure, through its own fault, to comply with the payment obligations provided for in IX, the central depository shall pay the late payment interest provided for by Article 1727.
In the event of failure to comply with the payment obligations provided for in VII, the person liable for the tax shall pay the late payment interest provided for in the same article 1727.
In the event of failure by the person liable for the tax or the member to comply with the declaration obligations provided for in the same VII, the latter shall pay the fine provided for in article 1788 C.
XII.-The tax is collected and controlled according to the procedures and under the same penalties, guarantees and privileges as turnover taxes. Claims are presented, investigated and judged according to the rules applicable to these same taxes.
XIII.-(Repealed).
