French General Tax Code
In forceI. - Companies operating in France, within the meaning of I of Article 209, are subject to a tax on high-frequency trading in equity securities, within the meaning of article L. 212-1 A of the Monetary and Financial Code, carried out on own account via automated processing systems.
II. - High-frequency trading in equity securities, within the meaning of I of this article, is the act of sending orders on a regular basis using an automated order processing system, characterised by the sending, modification or cancellation of successive orders for a given security separated by a period of less than a threshold set by decree. This threshold may not exceed one second. Constitutes an automated processing device, within the meaning of this article, any system enabling transactions in financial instruments in which a computer algorithm automatically determines the various parameters of orders, such as the decision to place the order, the date and time of placing the order and the price and quantity of the financial instruments concerned.
Systems used for the purpose of optimising order execution conditions or routing orders to one or more trading platforms or for confirming orders shall not constitute automated processing systems within the meaning of this article.
A decree shall define the terms of application of this II.
III. - The companies mentioned in I are not liable for tax in respect of the market-making activities mentioned in 3° of II of article 235 ter ZD.
IV. - Whenever the rate of cancellation or modification of orders relating to high-frequency transactions, with the exception of the transactions mentioned in III of this article, exceeds a threshold, defined by decree, over a trading day, the tax due is equal to 0.01% of the amount of cancelled or modified orders exceeding this threshold. This threshold may not be less than two-thirds of the orders transmitted.
V. - The tax is payable on the first day of the month following the month in which the cancelled or modified orders were transmitted.
VI. - The tax is declared and liquidated:
1° On the schedule to the declaration mentioned in 1 of Article 287 relating to the month or quarter during which the transmission of orders mentioned in II of this article was carried out;
2° For those liable for value added tax subject to the simplified tax regime provided for in article 302 septies A, on the annual return referred to in article 287(3) filed during the year in which the tax is due.
The tax is paid when the return is filed.
VII. - The tax is collected and controlled according to the procedures and under the same penalties, guarantees and privileges as turnover taxes. Claims are presented, investigated and judged according to the rules applicable to these same taxes.
