The French Ministry of Finance on 21 August 2013 added Bermuda, Jersey, and the British Virgin Islands (BVIs) to the black list, and removed the Philippines.
These changes are effective retroactively to 1 January 2013. However, they will affect transactions made with entities in these jurisdictions from 1 January 2014.
France’s updated “black list” now contains: Bermuda, Botswana, the British Virgin Islands, Brunei, Guatemala, Jersey, the Marshall Islands, Montserrat, Nauru, and Niue.
Effects of transactions with “black list” jurisdictions
Transactions involving these “black list” jurisdictions are subject to additional transfer pricing documentation requirements, and also invoke or involve the CFC rules, French withholding taxes, the French participation exemption regime, capital gains treatment, and the deductibility of expenses.
French entities that enter into transactions with related-party companies located in one of these jurisdictions will need to provide certain information to the French tax administration during a tax audit— e.g., a balance sheet, and profit and loss account prepared in line with the anti-avoidance measures provided by Article 209 B of the French general tax law (provisions that impose French corporate income tax on the profits or positive earnings of a legal entity operating under a "privileged tax regime" when directly or indirectly held (more than 50% of its shares, financial interest or voting rights) by a French taxpayer).
For more information, contact a tax professional with Fidal Internationale* in Paris:
+ 33 1 55 68 15 22
+ 33 1 55 68 16 57
+33 1 55 68 16 15
Xavier Sotillos Jaime
+ 33 (0) 155 681 465
*Fidal Direction Internationale is a French law firm that is independent from KPMG and its member firms.