• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Consumer Discretionary

Winners and Losers in a Temporary French Tax Revolution

Some French companies will get a temporary windfall, but others will need to pay more tax.
By ANTONIA OPRITA Nov 17, 2017 | 10:00 AM EST
Stocks quotes in this article: TOT, LVMHF, SNY, ENGIY, VIVEF, SBGSY, AXAHY, AIQUY, VCISF, CNPAY, ILIAF, EFGSF, SAFRY, CRERF, AFLYY, ORAN

It's not just President Donald Trump who has big ambitions for tax reform only to see them crushed and need to start again. Over in Europe, France is dealing with some back and forth on tax, which is likely to have consequences on the fourth-quarter earnings of the nation's biggest companies.

In October, the French Constitutional Court declared illegal a 3% tax on dividend distributions that was introduced in 2012 and that companies had paid on all dividends distributed in cash since then. This means the government now must return around €10 billion ($18 billion) to these companies. Ironically, the government will make the companies pay for the privilege.

To avoid breaching its 3% budget deficit ceiling, the French government decided to temporarily increase the corporate tax rate to 38.33% from 33.33% for companies with more than €1.0 billion in revenues and to 43.33% for those with revenues exceeding €3.0 billion. It calculated that this will raise €5.4 billion from 320 companies.

Equity strategists at Société Générale have identified some of the main winners and losers of this mess. The tax on dividends was only paid on cash dividends, so they looked at which companies paid the biggest cash dividends in the past five years to estimate how much cash they would get back.

Of course, some of those companies also fall in the categories that have been hit with the temporary corporate tax increase, so the strategists have offset that expense against the cashback windfall. The strategists stressed that their calculations are just estimates, because French companies do not need to break down revenue by country; consequently, it is difficult for them to calculate how much extra tax they will end up paying.

The 10 French companies that will benefit the most in absolute terms from the temporary tax reform because they get the most net cash back are oil major Total (TOT) , luxury fashion firm LVMH Moët Hennessy Louis Vuitton (LVMHF) , drug manufacturer Sanofi (SNY) , power firm Engie (ENGIY) , media group Vivendi (VIVEF) , cosmetics giant L'Oréal, energy management company Schneider Electric (SBGSY) , insurer Axa (AXAHY) , gas firm Air Liquide (AIQUY) and bank BNP Paribas.

The 10 biggest losers because they must pay back more than they get are infrastructure group Vinci (VCISF) , personal insurance provider CNP Assurances (CNPAY) , telecommunications provider Iliad (ILIAF) , construction group Eiffage (EFGSF) , aerospace group Safran (SAFRY) , credit insurance provider Hermes, retailer Carrefour (CRERF) , carmaker PSA Group, airline Air France-KLM (AFLYY) and mobile telephony Orange (ORAN) .

Investors with exposure to these stocks should not be surprised if they see some volatility in their fourth-quarter earnings. Still, overall, the French economy is in good shape and the prospects for growth are good.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities.

TAGS: Investing | Global Equity | Regulation | Markets | Consumer Discretionary | Consumer Staples | Energy | Financial Services | Healthcare | Industrials | Technology | Telecom Services | Economy | How-to | Politics | Stocks

More from Consumer Discretionary

Boot Barn Gets a Quant Upgrade: Do the Charts Fit?

Bruce Kamich
Jan 19, 2021 1:53 PM EST

Here's our latest analysis and trading strategy for the shares.

Signet Jewelers May Retest the Breakout From Its Base Pattern

Bruce Kamich
Jan 15, 2021 8:09 AM EST

There is a risk of a pullback to the top of the base pattern or down to the $30 area.

Norwegian Cruise Lines Fights to Survive

Jonathan Heller
Jan 13, 2021 11:00 AM EST

The markets appear to be looking forward for the cruise industry.

Coca-Cola Could Turn Lower as the Bullish Fizz Is Escaping

Bruce Kamich
Jan 6, 2021 9:15 AM EST

Price momentum often weakens before a turn lower.

Planet Fitness Charts Suggest Its Shares Could Use Some Firming Up

Bruce Kamich
Jan 6, 2021 8:11 AM EST

The technical signals indicate that the stock of the fitness chain could head lower in the weeks ahead.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:09 AM EST GARY BERMAN

    Is Copper About to Turn to Rust?

    Below is a very long-term copper chart.  As you...
  • 08:02 AM EST GARY BERMAN

    Tuesday Morning Fibocall for for 1/19/2021

    SPX (Long-Term View) The 1/8/21 high @ 3826.69 i...
  • 09:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    When it's time to sell, will you act or freeze?
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login