First Amended Finance Act For 2012

By Laurence Clot


Principal tax measures applying to companies and adopted by the amended Finance Act for 2012 (published on March 15th)

Changes to registration duty rates when purchasing shares

The Registration duty rates when purchasing shares, in force from 1st January 2012, have once again been modified.

Shares purchased from 1st August 2012 onwards will be subject to a progressive tax rate of 0.1% (the 5 000€ ceiling will not be restored).

As a reminder, shares purchased before 1st January 2012 were subject to a 3% registration duty, with a ceiling of 5000€.

For shares purchased between 1st January and 31st July 2012, the following rates apply:

  • 3% up to 200 000 €

  • 0.5% between 200 000 € and 500M€

  • 0.25% above 500M€.

As from 1st August 2012, the exemptions introduced on 1st January 2012 will also be modified :

  • share transfers subject to the Financial Transactions Tax will be exempt

  • share purchases from companies in the same group, within the meaning of Article L233-3 of the French Commercial Code will be exempt

  • shares bought back by companies, and which are to be sold to members of a PEE, will only be exempt if the company is listed. 

VAT- Increase in the ordinary tax rate

As from 1st October 2012, the ordinary VAT rate will increase from 19.6% to 21.2%.

Increase in social contributions on capital income

As from 1st January 2012 for capital incomes (real estate income, capital gain on sale of shares) and 1st July 2012 for investment products subject to withholding social security tax (interest, dividends, capital gains on real estate), social contributions will increase by 2 points, from 3.4% to 5.4%.

The overall rate for social contributions will therefore increase to 15.5%.

However, for income for which the taxable event is the book-entry or the withdrawal, buy-back or conclusion of a plan or contract (for example a PEL or life insurance), only the share of the income acquired and, where applicable, recorded from 1st July 2012 onwards will be taxed at the 5.4% rate.

Only incomes derived from saving accounts will be excluded from this measure: “livret A”[savings account], “livret jeune” [Savings account for young people], “livret développement durable”[savings account for sustainable development] etc …

Tax on financial transactions

Inspired by the European project to introduce a Financial Transactions Tax, presented by the European Commission on 28/09/2011, France has adopted its own tax mechanism, introducing three new taxes:

1. Tax  on the acquisition of capital shares - or other similar shares - of large French companies

As from 1st August 2012, acquisitions of capital shares or other similar shares of large French listed companies will be subject to this tax.

It concerns shares admitted to trading on a regulated market in France or abroad, which results in the property being transferred for consideration, and issued by a French company whose market capitalization exceeds 1 billion Euros on 1st January of the year of taxation.

Some operations will nonetheless be exempt:

  • acquisitions made as part of the issuance of capital shares,

  • transactions carried out by clearing houses,

  • transactions carried out as part of a market making activity,

  • transactions between companies of the same group within the meaning of Article L233-3 of the French Commercial Code,

  • acquisitions of shares in the context of a merger, demerger or partial transfer of assets, subject to the favourable tax regime.

The tax rate is set at 0.1% of the acquisition value of the shares.

The new mechanism will likely apply to more than one hundred major French companies (compartment A Paris-Euronext). As such, the tax on financial transactions will cause French and foreign buyers to incorporate fiscal impact in their future transactions.

2. Taxation of cancelled orders in the context of high frequency trading

As from 1st August 2012, companies operating in France will be subject to a tax on high frequency trading of capital shares carried out on their account via automated processing devices.

Such an operation will be recognized when a company modifies or cancels successive orders on a specific share, within a time period which cannot exceed one second. A decree will specify the time period to be respected.

The company will be liable to the tax if it exceeds the cancellation or amendment rate for the orders made per day. The decree which will specify this rate has not yet been published, but it will definitely not be lower than two thirds of the orders made per day.

The 0.01% tax rate will apply based on the number of orders cancelled or amended above the threshold.

3. Taxation of sovereign Credit Default Swaps

The purchase of Credit Default Swaps of a European country from 1st August 2012 onwards, will be subject to a new tax whenever the beneficiary of the contract does not have any holdings or assets whose value is correlated to the sovereign debt value of this country.

Only Credit Default Swaps purchased by an individual domiciled in France, companies operating in France, and legal entities established in France, are liable to this tax.

Subject to market making activities, these contracts will be taxed at a 0.01% rate on the basis of the notional value of the contract (i.e. facial or nominal value used to calculate payments connected to the contract).


Laurence Clot - Tax partner: / +33 1 42 68 63 44

Vaea Pery – Tax associate: / +33 4 78 68 63 29

Rébecca Feliman – Tax associate: +33 1 42 68 6718

Edouard Bouscasse – Tax associate: + 33 1 42 68 67 30