French Blacklist and Tax Impact
03 February 2023
1.Countries included on the French “blacklist” of uncooperative territories published on 3 February 2023:
American Samoa
Anguilla
Bahamas
British Virgin Islands
Fiji
Guam
Palau
Panama
Samoa
Seychelles
Trinidad & Tobago
Turks and Caicos
US Virgin Islands
Vanuatu
2. 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 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 as follows:
2012: 3.39%
2013: 2.79%
2014: 2.79%
2015: 2.15%
2016: 2.03%
2017: 1.67%
2018: 1.47%
2019: 1.32%
2020: 1.18%
2021: 1.17%
2022: 2.27%
2.2 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 instead of 19%. French social surcharges totalling 17.2% are also payable by individuals (not entities) leading to a total rate of 92.2% on the gain where the taxpayer is a resident of a blacklisted territory.
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.
Should you have any queries please contact Virginie Deflassieux or Catherine Le Pelley.
This publication has been carefully prepared, but it has been written in general terms and should be seen as containing broad statements only. It cannot be relied upon to cover specific situations without obtaining professional advice.
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