Three French mutual banks have said that they will be disproportionately affected by the Government's decision to introduce a temporary corporate surtax.
In a joint statement, the heads of three cooperative and mutual groups complained that companies with most of their activities in France will shoulder the burden of the new tax, while those operating mainly abroad will pay the least, while benefiting most from the dividend surtax refunds the temporary tax is designed to fund.
The statement, published in Les Echos on November 6 and also appearing on the website of Credit Agricole, expressed the views of Dominique Lefebvre, President of the National Federation of Credit Agricole, François Perol, Chairman of the Executive Board of Banque Populaire-Caisse d'Epargne (BPCE), and Nicolas Thery, President of the National Confederation of Credit Mutuel.
"In reality, it is an unjustified transfer, for the benefit of groups that prefer to invest abroad and at the expense of companies that operate in France," the bankers said.
"This primarily concerns mutual and cooperative companies which, because of their vocation, do not distribute dividends and put their results in reserve to invest and create jobs throughout France," they added.
The three financial institutions expect to pay EUR1bn (USD1.2bn) of the EUR5bn the Government hopes to collect in revenue from the new additional tax while only benefiting from a "marginal fraction" of dividend surtax refund.
The three percent surtax on dividend distributions and deemed dividend payments was introduced under former President Francois Hollande's Government on September 1, 2012, and applied to companies subject to French corporate income tax, although distributions made between companies within a group were exempt.
However, the nation's constitutional court ruled on October 6 that the measure was unconstitutional, and that dividend surtax payments should be paid back to taxpayers.
In order to help meet the cost of the estimated EUR10bn in dividend surtax refunds, the Government has proposed to effectively increase corporate tax from 33.3 percent to 38.3 percent for companies with turnover in excess of EUR1bn and to 43.3 percent for companies with turnover in excess of EUR3bn. The measure will apply for financial years ending between December 31, 2017, and December 30, 2018.