Answer ... Value added tax (VAT) is also applicable to corporate entities. Corporate entities collect VAT from their customers and pay it to the government after deducting the input VAT where they are allowed to do so. The standard VAT rate is 20%. A reduced rate of 10% applies to certain transactions, such as those in the restaurant trade. A reduced rate of 5.5% applies to food, gas and electricity, renewable energy and books. A further reduced rate of 2.1% applies to medicines, performing arts and the written press. Numerous types of transactions are exempt from VAT, including banking and financial transactions, insurance and reinsurance transactions, and some cases the rental of empty buildings (for which it is still possible to opt for VAT).
Corporate entities may be liable for customs duty when goods enter the French territory (from outside the European Union). Goods circulate freely within the European Union.
Excise taxes are also levied on specific consumer goods (eg, alcohol, tobacco).
A tax is levied on corporate entities’ activities or products which are considered polluting, such as waste, harmful emissions, oils and fossil fuels, detergents and extractive resources. Any business that manufactures, imports or introduces polluting products is likely to be liable for this tax in France. Its amount and the applicable rate vary according to the categories of activity and product.
Answer ... A transfer tax is due in relation to the transfer of interests in corporate entities at the following rates:
- 0.1% of the purchase price for transfers of shares in a non-listed company;
- 3% of the purchase price for transfers of shares in a company whose capital of which is not divided into shares of stock; and
- 5% of the purchase price for transfers of shares in companies whose assets consist principally of real estate.
A French financial transaction tax of 0.3% is also due on the acquisition of equity securities listed on a regulated market (Article 235terZD of the French Tax Code). This tax is due on transfers of equity securities (ie, shares and other securities that give, or may give, access to capital or voting rights, such as warrants or preferential subscription rights) in French-listed companies with a market capitalisation of more than €1 billion on 1 December of the year preceding that in which the transfer occurs. A list is published every year in the French Tax Administration guidelines.
Some exemptions from the financial transactions tax apply, such as:
- acquisitions made in the context of the issuance of equity securities (primary market);
- transactions operated by a clearing house/central securities depositary in the course of its clearing activities;
- acquisitions by French or foreign financial institutions and investment service providers in the course of their market-making activities; and
- transfers between companies that are members of the same group or during a merger, acquisition or partial transfer of assets that complies with the conditions set out in Article 210A or 210B of the French Tax Code.
Two other taxes also apply to financial transactions:
- a tax on high-frequency trading (Article 235terZDbis of the French Tax Code); and
- a tax on naked sovereign credit default swaps (Article 235terZDter of the French Tax Code).