Not All French Companies Will Benefit From Payback Of The Tax On Dividends

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French government has recently announced that they will temporarily raise taxes to the main national companies in order to finance the payback of tax paid on dividends, which was in force since 2012 but has been considered an illegal charge by the country’s Constitutional Court. Societé Generale strategists explain how that payback is going to be implemented as well as who will be the most benefited and affected. Furthermore, analysts focus on the impact of the tax raise itself.

On 6 October, the French Constitutional Court ruled that the tax on dividend distributions, which was introduced in 2012 at a 3% rate on all dividends distributed by companies paying corporate tax in France , was unconstitutional. This decision forces the government to pay back this tax to companies , leaving it with a bill of around €10bn.

With the aim of meeting its deficit target, the French government on 31 October announced a one-off levy on the country’s largest companies to finance part of the €10bn bill. The corporate tax rate will rise from 33.33% to 38.33% for companies with revenues above €1bn in 2017 and to 43.33% for those with revenues higher than €3bn. For Societé Generale, this is difficult to assess, “as companies typically do not report tax payments by country.”

Also, the corporate tax rate that is applied is a function of revenues as written in statutory accounts, not in consolidated accounts. Where information is not available, we calibrate the corporate tax based on revenues generated in France.

According to the government, this will impact 320 companies and generate €5.4 bn. However, for experts at the house some companies will benefit and others will not. Out of the 124 French companies SG follow, they believe 87 will be net beneficiaries.


On the other hand, the ten French companies that would be the most negatively impacted by the corporate tax hike despite the payback of taxes on dividend are the following:


This tax increase was passed by the national assembly but rejected by the French Senate last week. However, the bill is likely to pass in the end.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.