This Protocol* has been published by the Association for Financial Markets in Europe (AFME). Its purpose is to allow parties to adhere to a set of standard provisions in circumstances where transactions are subject to the taxation on financial transactions under article 235 ter ZD of the French Tax Code (Code general des impots).
This Protocol has taken effect from 1 November 2017 and replaces the original French FTT Indemnity Protocolas of then. We replaced the original Protocol as we were made aware of some practical issues that firms have come across. These issues turn on some of the finer points in the guidelines issued by the French tax authorities (after the Protocol was first developed) concerning liability for FTT reporting and payment in certain situations involving chains of intermediaries. The main changes compared to the original Protocol are around:
- the definition of ISP in the current Protocol includes Order Receiver Transmitters (ORTs) which are not liable for payment of the French FTT. This can result in ORTs signing up to the Protocol without having the obligation of paying the tax under French law;
- Adhering Parties to the original Protocol can operate in an Intermediation Desk capacity. If they fulfil the requirements of being an Intermediation Desk (as set out under French law), they are not liable for payment and reporting of the tax;
- the French tax authorities have indicated that they would like to see more details/a confirmation of the status of Adhering Parties (e.g. whether the Adhering Party deals on our own account and is duly licensed for dealing on own account and/or the Adhering Party executes orders on behalf of clients and is duly licensed for the execution of orders on behalf of clients);
- the exact definition of an indemnity event required further clarification.
A guidance note has been prepared to explain the functioning of the Protocol in more detail as well as the changes compared to the Protocol which was in place until 1 November 2017.
Until the end of November 2017, we will also maintain a comparison list which provides a comparison of all the legal entities that were signed up to the original French FTT Indemnity Protocol with those who have signed up to the Protocol on this page. This comparison list is prepared as a temporary service to adhering parties and will be updated on a weekly basis. However, adhering parties are responsible for monitoring and ensuring compliance with their obligations and should not rely on information provided in this comparison list. The comparison list should not be used as a substitute for checking the publication of Adherence Letters on the AFME website. In no event shall AFME be liable for any losses, damages, claims or expenses incurred or actions undertaken by a member as a result of relying on this comparison list.
A party intending to adhere to the Protocol should follow the process set out in clause 2.2 of the Protocol and send to AFME:
(a) hardcopy of the manually signed Adherence Letter
(b) hardcopy of the conformed Adherence Letter (ie. with the printed or typewritten name of each signatory in place of each signature)
(c) scanned pdf copies of (a) and (b)
Please send in scanned pdf copies of both the signed original and a conformed copy (ie. a copy with the printed or typewritten name of each signatory in place of each signature) to [email protected]
For those Adhering Parties whose Adherence Letter was uploaded on the AFME website before 1 November 2017, the Protocol will take effect from 1 November 2017. For Adhering Parties whose Adherence Letter is uploaded from 1 November 2017, the Protocol provisions take 5 business days following the date of publication of the Adherence Letter on the AFME website, as set out in Article 2.4(b) of the Protocol.
Parties are encouraged to take legal advice on its terms and effect before adhering to the Protocol. Please note the limitation of AFME’s liability at set out in Article 11 of the Protocol.
The Protocol, accompanying exhibits and completed forms that have been submitted to AFME can be found below.
*The Protocol is a legal document and parties intending to adhere to the Protocol should take their own legal advice on its terms and the legal effect of adhering to the Protocol.
Download Protocol and Exhibits:
For website technical queries please email [email protected]
AFME has published an amended version of the Protocol which will take effect on 11 August 2021. The amended version is available here.