Banks and Taxes in France

Between 2010 and 2017, French banks were subjected to a roughly 25 % increase of their compulsory withholding taxes, mainly because of a steep increase of specific contributions to the banking sector, in particular to the Single Resolution Fund (SRF). The high level of these withholdings, which weigh on banks, led to the share of financial sector businesses increasing about 10 % within the total amount of compulsory withholding taxes. However, banks are today faced with a triple challenge, regulatory, economic and technological, compelling them to increase their equity capital in a context that weighs on their profitability. This context sheds particular light on the problem of the competitiveness of French banks, which year after year have been subjected to an increase in their tax costs in relation to production costs. Continuing these costs over the long run presents a major problem considering competition in Europe at a time when the cards of the market are going to be partially reshuffled on the backdrop of Brexit, and especially because of the implementation of the banking union and the capital markets union.