NEW UPDATE OF THE FRENCH BLACKLIST : AS EXPECTED BAHAMAS AND TURK AND CAICOS ARE BACK IN THE FRENCH BLACKLIST
IN SUMMARY
By a decree dated February 3, 2023 amending the decree of February 12, 2010 taken in application of the second paragraph of the 1 of the article 238-0 A of the general tax code, the French blacklist of uncooperative States and Territories (ETNC), in tax matters, has been updated and published in the Official Journal on February 5, 2023. Bahamas, Turk and Caicos are back on this blacklist, which now contains 14 uncooperative States and Territories that can be classified into 2 sub-groups.
- FIRST GROUP
The first group of the French ETNC list includes Anguilla, the Bahamas, the British Virgin Islands, Panama, Seychelles, Turks and Caicos, and Vanatu.
All the French tax punitive measures targeting blacklisted States and Territories apply to the first group, among which:
- French source dividends or interest paid to bank accounts located in one of jurisdictions of the first group are subject to a 75% withholding tax irrespective of the tax residence of the beneficiary of such funds, unless the safeguard clause applies;
- Capital gains deriving from the sale of French securities realized by an entity or a trust registered in a jurisdiction of the first group suffer a 75% tax even if the proceed of such sale is cashed out on a bank account located in a cooperative country, unless the safeguard clause applies;
- Trusts with French connections (a French asset, a French tax resident settlor or beneficiary) which would be governed by the law of a blacklisted jurisdiction should be looked at closely since further detrimental consequences could be at stake.
- SECOND GROUP
The members of the second group on the French list of ETNC includes Fiji, Guam, U.S. Virgin Islands, Palaos, Samoa, American Samoa, Trinidad and Tobago.
The group of States and Territories are on the French blacklist only because they do not meet certain criteria of the EU list. They face a limited number of punitive measures. For example, entities located in such second group of States and
Territories do not fall within the scope of the 75% capital gain and French reporting obligations when they sell French securities.
For the 2 newly blacklisted jurisdictions (Bahamas and Turk and Caicos), the punitive measures will enter into force on 1 mai 2023. Until that date, the sale of French securities by entities located in such jurisdictions remain outside of the scope of the 75% punitive capital gain tax.
