• Proposed Change to the FTT Rules
  • November 12, 2015 | Authors: Nicolas Andre; Siamak Mostafavi
  • Law Firm: Jones Day - Paris Office
  • During the first phase of the parliamentary discussions of the Finance Bill for 2016 (Projet de Loi de finances pour 2016), the members of the lower house (AssemblĂ©e Nationale) have adopted a change to the computation of the taxable basis of the FTT. The FTT applies to the acquisition of certain defined French listed shares, at the rate of 20 basis points applied to the acquisition cost.

    The current FTT rules provide, inter alia, that if the same relevant in-scope shares are purchased and sold on the same trade date, the tax basis refers to the excess, if any, of the shares purchased over those sold; accordingly, no FTT is due if the same number of shares are purchased and sold during the same trade date.

    The change voted by the lower house would result in the taxation of the acquisition of the gross number of shares purchased during a given trade date, i.e. the number of same shares sold the same day would not be taken into account.

    The original intention of the lower house was to introduce the new rules as from January 1, 2016; at the request of the Government, the house agreed to defer the application to December 31, 2016. By that time, the Government hopes that the European financial transactions tax would be adopted, with the consequence that the FTT would become irrelevant.

    The French Senate would probably reject, in the coming weeks, the above FTT change; however, under French constitutional rules, the final say on Finance Law matters belongs to the lower house, which should confirm the change during the second discussions in December of this year.