FTT : Understanding the French Financial Transaction Tax

When investing in the stock market, particularly in major French companies, you may have noticed an extra line on your trade confirmations. This is the FTT, or Financial Transaction Tax (Taxe sur les Transactions Financières in French). Often overlooked by beginner investors, this tax has a direct impact on the cost of your acquisitions.

Which stocks are affected? How is it calculated? And most importantly, what is the current rate? Here is a complete guide to mastering the tax implications of your stock market orders.

What is the FTT (Financial Transaction Tax)?

Introduced in August 2012, the FTT is an indirect tax applied to the acquisition of shares in certain large French companies. Its initial objective was twofold: to make the financial sector contribute to restoring public finances and to attempt to limit short-term speculation, although its effectiveness on this latter point is debated.

Concretely, it is a tax added to the purchase price of your securities. It should not be confused with capital gains tax or social levies; the FTT is a tax on the purchase, not the profit.

Which securities and transactions are subject to the FTT?

Not all stocks are taxed. For a transaction to be subject to the FTT, the issuing company must meet two specific cumulative criteria:

1. Headquarters: The company must have its registered office in France.
2. Market Capitalization: The company must have a market capitalization exceeding one billion euros as of December 1st of the previous year.

Each year, an official list of liable companies is published. It includes the vast majority of CAC 40 companies (LVMH, TotalEnergies, Sanofi, BNP Paribas, etc.) and many stocks from the SBF 120 index.

Covered transactions and exemptions

The tax applies to the acquisition for consideration of an equity security (shares) resulting in a transfer of ownership. This means that buying shares for cash or via the SRD (Deferred Settlement Service) is taxed.

Conversely, certain operations are exempt:

• The purchase of bonds.
• Purchases on the primary market (e.g., during an IPO or capital increase).
• The purchase of derivatives (options, warrants, CFDs), unless the exercise of the option results in the physical delivery of the shares.
• "Intraday" transactions (more on this below).

What is the FTT rate and how is it calculated?

The calculation of the FTT relies on two elements: the current rate and the taxable base.

Evolution of the rate

Historically set at 0.20% at its inception, then at 0.30%, the FTT rate is subject to regular revisions within the framework of finance laws. It is important to note that this rate rose to 0.40% as of April 1, 2025. This is a parameter to consider when calculating the immediate ROI of your investment.

The calculation method: The net buying position

The FTT is not simply applied to every buy order. It is calculated on the net buying position at the end of the trading day.

This means we sum your purchases and subtract the sum of your sales on the same security during the same day.

• If you buy 100 TotalEnergies shares in the morning and sell them in the afternoon (intraday), your net position is 0. You pay no FTT.
• If you buy 100 shares and sell 40 during the day, you will be taxed only on the 60 shares remaining in your portfolio that evening.

It is your financial intermediary (bank or broker like DEGIRO, BoursoBank, etc.) that is responsible for collecting this amount, declaring it, and paying it to the French Public Treasury.

Impacts and criticisms: The debate over the FTT

The FTT is a recurring topic of economic and political debate.

For the State, it is a significant source of revenue. However, critics point out that this tax weighs primarily on retail investors and long-term investors who hold their securities, rather than on high-frequency traders or algorithms that close their positions before the end of the day (thus avoiding taxation via the net position mechanism).

Furthermore, some analysts believe that the FTT may harm the liquidity of the Paris marketplace, encouraging foreign investors to turn to untaxed markets (such as US or German exchanges, although European tax projects are regularly discussed).

Does the FTT apply to Carbon Allowances?

This is a relevant question for investors looking to diversify their portfolio with uncorrelated assets. European Union Allowances (EUA) are assets classified as commodities or raw materials. They are not equity securities (shares) issued by a company.

Consequently, investing in carbon allowances, as proposed by Homaio, is not subject to the French FTT. This is a tax advantage at purchase compared to traditional French stocks, allowing you to invest 100% of your capital without immediate tax friction upon entry.

Conclusion

The FTT is an unavoidable reality for anyone wishing to invest in the flagships of the French economy. Although it represents an additional cost (now 0.40%), it should not be a deterrent to investment if your strategy is solid and oriented towards the long term. Nevertheless, understanding how it works and its exemption mechanisms (especially intraday rules) is essential to optimizing the management of your portfolio.

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