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French transaction tax already shows flaws

What does the French transaction tax mean for you as a personal investor?

I just received a note from my broker here in Germany detailing the impact of the French transaction tax on the shares of French publicly traded companies.

Implementation date 1 August 2012.

The main points are:

1. You are only taxed if you buy shares in a company listed in France with a market value of more than €1 billion.

2. The tax is levied irrespective of where the transaction takes place. For example if you buy the shares of a French company on a German stock exchange you would still be taxed.

3. The current rate of the transaction tax is 0.2% only on purchase.

4. The tax is levied not only on the purchase of shares but also shares delivered under derivative contracts.

5. My broker in Germany would charge me the tax and pay it to the French treasury.

At first glance the tax is nothing else than the stamp duty that you pay in the UK already. Only the UK rate is 0.5% and the French transaction tax rate 0.2%. This gives the politician room for an increase.

I am sure the 0.2% is not high enough that it will scare you away from the French stock market as there are just too many undervalued companies there at the moment.

It just means that there is another tax you have to pay while trying to earn a decent return on your after tax money.

So much for the greedy bankers paying back the money they stole from taxpayers when they had to be bailed out.

Nobody else’s is going to pay this tax except you and me – who had nothing to do with the banking crisis.

Or do you see yourself as a greedy speculator?