Share buybacks in the government’s sights to replenish state coffers

Share repurchase is a practice little known to the general public, and it is increasingly used by large companies to increase their share price. The government is considering taxing these operations.

Crédit Agricole announced, Monday September 30, the launch of a share buyback program covering 15 million shares. Sopra Steria, the IT services company, is launching a 150 million euro share buyback plan. And in a completely different category, which amounts to billions, TotalEnergies announced, Wednesday October 2, share buybacks worth eight billion dollars in 2024 and the same in 2025. All these groups are buying back their shares and then canceling them.

The objective is to increase the value. By buying back their own shares and then deleting them, these groups reduce the number of shares in circulation on the market. This increases the value of the share, and increases the stock price. It’s a mechanical, fairly easy way to make money. The process is very common in the United States. A few months ago, Microsoft, for example, carried out the largest buyout in its history: a $60 billion plan. In the spring, Apple announced an XXL share buyback program of $110 billion.

On the French side, the amounts are far from these records, but it is more and more common. This practice is criticized because the company that buys back its own shares uses funds that it could have invested in innovation, ecological transition or salaries.

Emmanuel Macron has often denounced the “cynicism“large companies which use it. He had also asked the government to”work on an exceptional contribution“, a tax on these operations. The Ministry of Finance has been working on it in 2023, but without going through with it.

The project is back on the table since the State needs money. According to Bercy estimates, this tax on share buybacks could bring in an additional 300 million per year, or around 1% of the amount of share buybacks carried out in 2023 by French companies.