French Financial Transaction Tax: French Parliament Adopts Proposed Legislation on Financial Transaction Tax with Few Amendments

Sullivan & Cromwell LLP - March 6, 2012

Draft legislation to introduce a financial transaction tax (the “FTT”) in France was presented by the French government on 8 February 2012 (see our client memorandum of 8 February 2012). This proposal was adopted by the French Parliament on February 29, 2012. The most notable amendment voted by the Parliament is an exemption for transfers of convertible bonds (obligations convertibles et obligations échangeables). The FTT will be applicable to transactions carried out as from 1 August 2012. As noted in the attached, new taxes on high frequency trading and on certain credit default swap transactions will also come into effect as from 1 August 2012.

In addition, French transfer tax rates applicable to transfers of shares (actions), which currently range from 0.25% to 3%, will be replaced by a single 0.1% rate as from 1 August 2012.