Market associations argue that such a measure could lead to a drying up of liquidity in French company shares and weaken their valuation. Amafi has published an impact study of the previous increase from 0.3 % to 0.4 %, which took effect in April.

While uncertainty still reigns over the content of the 2026 budget, market associations are concerned about parliamentary plans to further increase the financial transaction tax (FTT) and extend its scope to derivatives and intraday transactions, i.e. transactions carried out within the same day. 

"The adoption of amendments in the National Assembly extending the scope of the financial transaction tax (FTT) to derivatives and intraday transactions is, unfortunately, a perfect demonstration of the propensity of some parliamentarians to score own goals when it comes to competitiveness.” protested Jean-Charles Simon in a LinkedIn post. The chief executive of Paris Europlace, who took up his post three years ago, is preparing to step down. .

Scaring off market operators

"It is astonishing that they do not realise that such a tax, applied by design only to listed shares of companies established in France, would obviously lead to market operators fleeing these securities, drying up liquidity and weakening their valuation, and could even push companies to relocate their headquarters to escape these deleterious effects. To top it all off, public revenue from the FTT would be likely to decrease rather than increase significantly, as these MPs seem to naively believe. By doing this, they would in fact be shifting market activity away from French shares and towards foreign shares: well done, champions! At a time when we are seeking to increase the allocation of household savings to domestic shares, this is really well thought out,” he said angrily, before expressing his hope “for the sake of the French economy that the rest of the parliamentary process for the finance bill will make it possible to correct this heresy".".

For its part, Amafi published an impact study on Thursday intended to measure the effects of the tax increase from 0.3% to 0.4%, which took effect on 1 April. As a reminder, the rate applicable to this tax was set at 0.10% when it was introduced in 2012. It was immediately raised to 0.2% and then to 0.3% on 1 January 2017. 

Rules and exemptions

The French Financial Markets Association specifies that a transaction is subject to FTT when it consists of the acquisition of equity securities for consideration, resulting in a transfer of ownership on the settlement date. Equity securities subject to FTT are shares and instruments giving access to capital or share certificates issued by companies with their registered office in France and with a market capitalisation of more than €1 billion on 1 December of the previous year.

However, exemptions are provided for so as not to penalise activities that contribute to the proper functioning of the markets, such as transactions carried out under a liquidity contract and market-making transactions.

"By comparing French companies' shares with their equivalents in Germany, Spain, Italy and the United Kingdom, the study shows that trading volumes for French shares subject to FTT grew less rapidly and even declined after the increase, while French shares not subject to taxation followed the upward trend observed elsewhere.”, concluded the study (see infographic below).

Increase in the cost of capital

"This contraction in volumes directly increases the cost of capital for the companies concerned: by reducing the liquidity of their shares, the FTT undermines companies' ability to finance themselves effectively on the market. Because it is borne by investors, the tax also weighs directly on equity savings, which are essential for financing the productive apparatus. By penalising French shares in the allocation choices of portfolio managers, whose horizon is often European or even global, it encourages the transfer of capital to untaxed issuers outside our borders, but also to competing financial centres.".

Amafi is therefore calling for any changes to the FTT to be conditional on an objective assessment of its economic impact and a harmonised approach at European level.

Three observation periods were selected: 

• A first period, denoted P1, prior to the adoption of the FTT increase, extending from 2 January to 14 February, with the increase having been adopted on Saturday 15 February. This period serves as a reference for activity unaffected by changes in the FTT, as parliamentary discussions on this subject had not yet begun at that time. 
• A second period, P2, between the adoption of the increase and its entry into force, i.e. from Monday 17 February (the first trading day after the increase was adopted) to 27 March (with transactions on 27 March settling on 31 March, which is the last trading day before the FTT increase takes effect on 1 April). This period aims to identify any anticipation of the tax increase by market participants. 
• A third period, P3, following the entry into force of the increase, ran from 28 March (with transactions executed on that date settling on 1 April) to 8 October, when it was decided to stop collecting data after the entry into force for the purposes of the study. This period allows for the study of the potential effects of the new tax rate coming into effect.