In early December the French minister, Mr Gérald Darmanin, announced the updated list of States and territories that are considered by France to be uncooperative on tax matters. The blacklist (la liste des Etats et territoires non coopératifs en matière fiscale - "ETNC") was last updated three years ago in 2016 and since then there have been significant changes.
The 2016 blacklist included six states that in most cases have ratified an administrative assistance convention in tax matters, under the terms of which they agree to the exchange of tax information with France. The six states no longer included are Botswana, Brunei, Guatemala, Marshall Islands, Nauru and Niue.
It should be noted that Article 31 of Law 2018-898 of 23 October 2018 on the fight against fraud has added the European list of non-cooperative jurisdictions to the ETNC.
Of the seven states from the 2016 blacklist, only Panama remains blacklisted following the update. The French authorities, while acknowledging some progress has been made with the ratification of an administrative assistance convention in tax matters, remain of the view that the information that Panama has so far provided is inadequate. For this reason the French government does not consider that sufficient progress has been made to justify its removal. This might change in the future, with the newly elected Panamanian government committed to transparency and it has already introduced legislation to create a register of beneficial ownership and improve accounting information.
Joining Panama on the updated 2019 list are Anguilla, the Bahamas, Fiji, Guam, British Virgin Islands (BVI), Oman, American Samoa, Samoa, Seychelles, Trinidad and Tobago, the United States Virgin Islands and Vanuatu.
The addition of these states, some of which are returnees to the list, is as a result of what the French authorities consider is their facilitation of offshore structures and enabling taxpayers to reduce their tax basis or the transfer of profits.
In the cases of Anguilla, Bahamas, BVI and the Seychelles, the French authorities further consider they are not honouring their undertakings to exchange tax information as they committed to do. The example has been given of 230 requests made by France to the BVI for information as a result of disclosures made in the Panama Papers, in which the average time taken for the BVI to reply is 400 days. France also highlighted a similar issue with the Bahamas with 50 requests outstanding.
For those states now included on the blacklist there will be tax implications, notably significant withholding taxes at 75% on payments of interest, dividends etc being paid from France to the blacklisted jurisdictions.
For more information please contact Simon Huxford: s.huxford@rosemont-mc.com
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