Bermuda, the British Virgin Islands , and Jersey have been added. The Philippines have been removed. Ten countries and territories compose now the list
The French Ministry of Economy and Finance updated its non-cooperative countries and territories (NCCT) list on August 21st, 2013. This list comes into force retroactively on January 1st, 2013.
This list was created in 2009 as part of the fight against the tax havens. Four years later, this update shows that France is still involved in, and a leader of promoting tax transparency.
Few conditions must be met for a country or territory to be on the French NCCT list. First, the entity must not be a member of the European Union. Second, it must have been reviewed by the OECD with regard to transparency and exchange of information of tax matters. Thirdly, it must not have concluded with France an administrative assistance agreement; and finally it must not have done this with at least 12 other countries or territories.
In 2013, the Philippines were removed, because they improved their tax agreement with France allowing the exchange of all information necessary for the application of the French tax legislation. However, Bermuda, the British Virgin Islands and Jersey have been added to the list. Guernsey is not (yet) included.
From January 1st, 2014, transactions with one of these three new NCCT will be subject to more strict tax measures:
- Additional transfer pricing documentation requirements;
- Non deductibility of expenses accrued or paid to NCCT;
- 75% withholding tax on royalty payments made to NCCTs;
- 75% withholding tax on interest and fixed income payments paid to NCCT;
- 75% withholding tax on dividend payments made to NCCT;
- Full taxation of dividends received from NCCT (non application of the French participation exemption regime);
- Full taxation of capital gains realized by French residents upon the sale of shares in NCCT (non application of the special capital gain tax regime);
- 75% taxation of capital gains realized by NCCT on the sale of French properties;
- 75% taxation of capital gains realized by NCCT on the sale of French shares.
Notwithstanding, the French Ministry of Economy and Finance annonced that France would like to go further to completely eradicate tax evasion. Additional requirements could be introduced to institute automatic exchange of information between countries on bank accounts and assets held abroad by French residents. From 2016, countries refusing the automatic exchange of information could be added to the French blacklist of non-cooperative countries.
Special attention should be given by French companies to businesses and transactions with persons, companies and financial institutions located in those countries and territories, with potential reorganizations to consider.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.