Business and Politics
France achieved a GDP of $2.599 trillion in 2020, closely following the United Kingdom. The currency in France is the Euro. The leading index for the French is the CAC 40, which combines the returns of the 40 largest companies in France.
The French economy, similar to the German economy, is dependent on the economic situation. The largest sector in France is the cyclical consumption, which is particularly defined by companies in the luxury industry such as LVMH (Louis Vuitton Moët Hennessy), Kering, and Hermès, as well as companies in the automotive industry such as Renault.
However, the industrial sector is also very important for France. Companies like Schneider Electric, Airbus, and Vinci are global players with significant international influence.
All other sectors such as non-cyclical consumption or finance no longer play a significant role in the market capitalizations of French companies.
France is a centrally governed country with a close connection between the economy and the state. The French government advocates for workers' rights and a regulated capitalism. In many important decisions, politicians and employees have a voice. For example, during takeovers and mergers, employees can actively oppose and prevent the acquisition. Similarly, the French government has also protected companies like Hermès from hostile takeovers.
The specific tax issue in France for German shareholders:
The financial market in France is also regulated. Investors have to pay 0.3% of the purchase price as a financial transaction tax on every stock purchase. This also applies to German investors who buy their stocks on a German stock exchange. In addition, the tax on dividends is higher than 25%. In 2021, investors have to pay 26.5% withholding tax on dividends from France, of which only 12.8 percentage points can be credited against German capital gains tax. This creates a double burden for private investors from Germany. Instead of the approximately 26.4% tax rate for German dividends, one has to pay 39.4% in taxes on French dividends. In 2022, the withholding tax will be reduced to at least 25%. However, there are ways to avoid the tax. Unfortunately, a refund is only recommended for very large sums due to the high costs.
The largest companies
There, LVMH can be highlighted, especially. In terms of market capitalization, it is one of the largest companies in Europe with a market capitalization of over 300 billion euros. According to market capitalization, it was even the most valuable company in Europe at times in 2021. Other major companies include Total (Oil & Gas), Sanofi (Pharma), Airbus (Aviation industry), Air Liquide (Industry), or AXA in the financial sector. The bank BNP Paribas is also well-known among many shareholders due to Consorsbank, which is listed in Germany.
Headquarters of the largest companies
BNP has its headquarters in the capital Paris. Also based in Paris are AXA, Sanofi, Air Liquide and L'Oréal. Luxury brands LVMH and Hermès also have their headquarters in Paris. One can recognize the power and prestige that Paris radiates beyond France.
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Euronext is a well-known trading place in France. However, Euronext is also an international stock exchange or stock market with additional trading places in Amsterdam, Brussels, Dublin, Lisbon, Milan, and Oslo.
Performance of the Indices
The CAC 40 includes the 40 most traded French stocks listed on Euronext Paris. The index level is solely based on stock prices. The three largest companies in the CAC 40 are LVMH, Sanofi, and L'Oréal.
The CAC 40 was first published on December 31, 1987, with a base value of 1,000 points. Currently, the leading index stands at just over 6,900 points.
Opening hours in France
The trading hours of Euronext in Paris are from 09:00 – 17:30 (CET).
