In France, Islamic finance means Sharia-compliant contracts and investments that operate within ordinary banking, financial and tax law with no special status: the ACPR and the AMF supervise the providers, while a Sharia committee assesses religious compliance of each product.
Why Paris has been courting Islamic finance since 2007
In the mid-2000s the Paris financial centre sought to attract capital from Gulf investors and to serve a large Muslim customer base. Instead of a dedicated statute, the chosen method was a series of clarifications issued by the regulators and by the tax administration.
The AMF's July 2007 position on funds claiming compliance
On 17 July 2007 the AMF accepted that a fund may apply non-financial criteria drawn from Islamic law: excluding sectors such as alcohol or tobacco and capping debt ratios, for instance at 33 percent. These criteria must be objective and published.
Sharia supervisory board versus the asset manager's independence
The regulator accepts a religious board provided it does not replace the fund manager. The board gives an opinion on assets the management company has already selected, and the manager remains solely accountable to unitholders for every investment decision taken.
Purifying income through donations defined in advance
An Islamic fund may commit to passing on to named charities the share of income regarded as non-compliant, such as incidental interest earned by investee companies. The mechanism and its beneficiaries must appear in the regulatory documents given to investors before subscription.
From Sukuk prospectus guidance to the 2009 censure
In July 2008 the AMF set out the disclosures expected for listing Sukuk in Paris. On 14 October 2009 the Constitutional Council struck down an article adapting the French fiducie to these securities, on procedural grounds, because it was unrelated to the law voted.
Four instruments covered by the BOFiP since 2012
Published on 12 September 2012, the BOI-DJC-FIN division gathers tax guidance on Murabaha, investment Sukuk, Ijara and Istisna. It addresses corporate income tax, withholding taxes, VAT, the territorial economic contribution and the registration duties applying to each structure.
How a Murabaha mark-up is taxed
The tax authority treats the reward for deferred payment as interest, spread on a straight-line basis over the payment period. Conditions apply: a financier licensed as a credit institution or investment firm, resale within six months of purchase and a mark-up shown separately.
Containing the cost of two property transfers
In a property Murabaha, the bank's purchase followed by resale to the client risked being taxed twice. The guidance places the financier's acquisition under the property-dealer regime and excludes the mark-up from the transfer duty base, which largely neutralises the extra cost.
Investment Sukuk: a regime modelled on bonds
For the issuer, the deductible charge is the expected profit rate set in the contract. For the holder, income follows the rules for interest. The certificates must grant a right comparable to direct or indirect co-ownership of identified underlying assets.
A retail offer that stayed narrow after 2011
The first current account presented as Sharia-compatible was launched in June 2011 by Chaabi Bank, a subsidiary of Morocco's Banque Populaire group. Since then, supply has relied on a few networks, brokers and payment institutions, without a fully fledged Islamic bank.
Payment account or bank deposit: why the licence matters
A payment institution can neither lend nor pay a return; client funds are ring-fenced but fall outside deposit insurance. Only a credit institution belonging to the FGDR scheme covers up to 100,000 euros per depositor. The exact status can be checked in REGAFI.
Questions to ask before signing a halal home finance deal
Ask who actually buys the property and on what date ownership passes, how the mark-up is calculated, what happens after a late payment or early settlement, and which Sharia committee issued a written opinion on the signed version of the contract.
Specialist external source
The Banque de France website presents the ACPR, which licenses and supervises banks and insurers, together with the tools for checking an institution's regulatory status.