France and Jersey entered into a tax information exchange
agreement (TIEA) on 23 March 2009. Jersey has previously entered
into similar agreements with 11 other OECD countries.
One of the key benefits of the TIEA with France is that Jersey
investment funds and real estate holding structures will qualify
for exemption from the French 3% real estate tax which is assessed
annually on the fair market value of the real property situated in
France. The exemption also extends to interests, shares and units
in certain intermediate structures holding French real estate
assets. An extract from the text is set out below:
"Subject to compliance with certain reporting obligations
(information on the entity's owners and assets), the 3% tax
will apply neither to entities with legal personality owning
directly or indirectly one or more buildings in France or owning
real property rights to such assets, provided that their registered
office is in Jersey, nor to entities without legal personality
owning directly or indirectly one or more buildings in France or
owning real property rights to such assets, provided that they have
been created under the laws of Jersey;
the same goes for the provisions in the second paragraph of
Article 123bis(3) of the French General Tax Code, which impose
special rules (minimum fixed income) for calculating the taxable
income of natural persons who own units or shares in entities
located in a territory which has not signed an administrative
assistance agreement with France."
The TIEA will following implementation result in the following
vehicles being exempted from the 3% French tax in respect of real
estate interests in France:
Jersey companies directly owning property in France
Jersey limited partnerships whose general partner is a Jersey
company and which own property in France
Jersey companies which are trustees of Jersey unit trusts which
own property in France
The latest agreement is consistent with Jersey's policy of
constructive international engagement and highlights the mutual
respect between France and Jersey. Jersey is committed to staying
at the forefront of well regulated international financial centres
and complies with international standards of financial regulation
as well as co-operating in combating the financing of international
The TIEA will need to be ratified by the French Parliament and
by the States of Jersey before being brought into force. Once the
TIEA is implemented Jersey will be treated by France as a territory
which has signed an administrative assistance agreement to fight
tax fraud and evasion.
Jersey has previously entered into Tax Information Exchange
Agreements with the USA (2002); the Netherlands (2007): the seven
Nordic countries (Denmark, the Faroes, Finland, Greenland, Iceland,
Norway and Sweden - in 2008) Germany (2008) and the UK (2009).
Jersey is close to signing a TIEA with Ireland and negotiations
are well-advanced with Australia and New Zealand. Discussions are
also underway with Spain and Italy and Jersey is more than willing
to extend such agreement to all other jurisdictions, including OECD
countries, when they are ready to engage.
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.
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