French Financial Transaction Tax on ADRs and ORDs Increases to 0.40%

The French government has implemented an increase in its Financial Transaction Tax (FTT) rate, raising it to 0.40% on the acquisition of both American Depository Receipts (ADRs) and foreign ordinary shares (ORDs). This adjustment, which became effective on April 1, 2025, marks a notable change from the previous rate of 0.30%. The move was highlighted by Dan Loewenherz, who stated in a recent social media post, "> "The French government has instituted a 0.40% Financial Transaction Tax on both American Depository Receipts (ADRs) and foreign ordinary (ORDs).""

The French Financial Transaction Tax was initially introduced on August 1, 2012, targeting acquisitions of listed shares in French companies. Over the years, its scope expanded to include certificates representing registered shares, such as ADRs and European Depository Receipts (EDRs), with ADR transactions specifically brought under the tax in December 2012. The latest increase to 0.40% was formalized through the Finance Law for 2025, published in February 2025.

This tax applies to buy orders of shares issued by French companies with a market capitalization exceeding  1 billion, as measured on December 1 of the preceding year. The FTT is levied on net purchases, meaning investors pay the tax on the additional shares held at the end of a trading day compared to the previous day. This mechanism aims to tax the ultimate acquisition of securities.

Investment Services Providers (ISPs) executing buy orders are typically designated as the accountable parties for the FTT. The tax is applied irrespective of the nationality of the ISP, the investor's tax residency, or the location where the transaction is traded or settled. This broad application ensures that the tax impacts a wide range of international investors and financial institutions dealing in eligible French securities.