French List of Uncooperative Territories
and French Tax Consequences of the
Blacklisting
`
1.
Countries included on the French
“black list” of uncooperative
territories as at 1 January 2016:
Botswana
Brunei
Guatemala
Marshall Islands
Nauru
Niue
Panama
2.
Article 244 bis which deals with the
taxation of French property traders
stipulates that their profits are taxed
at 33.3%, but this rate is increased to
75% for traders resident in blacklisted
territories.
2.3
Article 244 bis A relates to French
capital gains tax on the disposal of
French real estate. The rate of 75%
applies to gains realised by residents
(individuals and entities) of blacklisted
territories. French social surcharges
totalling 15.5% are also payable by
individuals (not entities) leading to a
total rate of 90.5% on the gain.
2.4
Article 244 bis B: The sale of French
stocks and shares may be subject to
the 75% levy regardless of the level of
shareholding.
2.5
Under Article 125-0-A the taxable
proceeds from an “assurance vie” paid
to a resident of a blacklisted territory
are subject to a mandatory withholding
tax rate of 75%.
2.6
Articles 119 bis and Article 182 B –
Under these articles, the 75% rate
applies to dividends, other income or
remuneration paid to residents of such
territories. Salaries thankfully are not
affected and are subject to rates of
12% and 20% maximum with a tax-free
portion. Payments made to artists
performing in France are normally
taxed at 33.33% or 15% under Article
182 A bis. This increases to 50% if the
artist resides in an uncooperative
territory.
French Tax effects for blacklisted
territories
Below is a non-exhaustive summary of
the French tax implications for
individuals, companies and other
entities resident in the blacklisted
territories
or
French
resident
individuals, companies and entities who
have any dealings with them.
2.1
2.2
Article 123 bis provides that French
residents who own 10% or more in a
financial investment holding entity
situated in a low tax jurisdiction are
taxed on a look-through basis on their
share of the income arising within the
entity. If such entity is registered in a
blacklisted territory or a territory with
no agreement with France to fight
fraud and tax evasion, there is a
presumption that the 10% holding limit
is reached. In these cases the taxpayer
is assessed on a minimum taxable
income basis if this is higher than the
effective income produced.
The
minimum income rates are available on
www.bdo.gg / French Tax / current
French tax rates.
2.7
The assets transferred by a French
resident settlor to a trust established in
a blacklisted jurisdiction are subject to
the 60% inheritance tax rate regardless
of how the assets are allocated or
distributed upon death.
2.8
Where a French company owns 50% or
more in an entity registered in a
blacklisted territory, corporation tax is
levied in France on that entity’s profits
(Article 209B).
2.9
If a French company’s subsidiary is
registered in a blacklisted territory the
exemption from corporation tax for the
French company receiving its dividends
is disallowed.
2.10 Article 238 A relates to transfer pricing
and the deductibility of certain
payments made by individuals or
companies in France. If the entity
receiving these payments is situated in
a low rate territory, the French
taxpayer or entity must provide full
evidence that pricing is adequate and
the payment represents a bona fide
transaction.
There may be other issues resulting from the
blacklisting of the above territories. Advice
should therefore be sought when dealing with
these jurisdictions and ideally before any
transaction takes place.
For further assistance please contact our
French Tax team on [email protected].
Updated May 2016
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