List of noncooperative states and territories updated

This article was first published on Tax@Hand, and is reproduced on this blog with the authorization of its authors.

France’s list of noncooperative states and territories (NCSTs) was updated on 5 February 2023 (following the issuance of a decree on 3 February) to add the Bahamas and the Turks and Caicos Islands. The Ministry of Finance updates the NCST list every year.

As a reminder, with effect as from 1 January 2010, defensive tax measures apply to jurisdictions on the list, including, for example, the non-application of the French participation exemption regime, increased withholding taxes on outbound payments, and the strengthened application of domestic anti-abuse measures.

Since 1 December 2018, the list of NCSTs also includes the jurisdictions referred to in the EU list of noncooperative jurisdictions for tax purposes. However, the modification of the list is conditioned upon the publication of a specific decree to that effect by the French tax authorities (FTA).

The measures that apply to the noncooperative jurisdictions listed by the EU depend on why the jurisdictions are considered noncooperative. Jurisdictions with rules/regimes that facilitate offshore structures or arrangements aimed at attracting profits that do not reflect real economic activity are subject to all defensive tax measures, while jurisdictions listed because they do not fulfill another criterion are subject only to some of these measures.

The Bahamas and Turks and Caicos Islands were added to the French list for 2023 due to their inclusion on the EU list of noncooperative jurisdictions on 4 October 2022 as jurisdictions that facilitate offshore structures or arrangements aimed at attracting profits that do not reflect real economic activity. No jurisdiction was withdrawn from the list.

As a result, all of France’s defensive tax measures will apply to the Bahamas and Turks and Caicos Islands as from 1 May 2023 (defensive tax measures targeting NCSTs apply as from the beginning of the third month following the inclusion of a jurisdiction on the list).

It should be noted that the addition of Anguilla to the EU “blacklist” in October 2022 had no impact since this jurisdiction was already on the French NCST list for other reasons.

France’s updated list currently includes the following 14 states and territories:

  • Jurisdictions subject to all French defensive tax measures: Panama, Anguilla, British Virgin Islands, Seychelles, Vanuatu, Bahamas, and Turks and Caicos Islands.
  • Jurisdictions subject to only some of the French defensive tax measures: American Samoa, Fiji, Guam, Samoa, Trinidad and Tobago, Palau, and US Virgin Islands.

Please note that, on 14 February 2023, the EU announced that the British Virgin Islands, Costa Rica, the Marshall Islands, and Russia were added to the EU list of noncooperative jurisdictions. The FTA should update its list accordingly next year.

Alice de Massiac

Alice de Massiac, Partner, has developed extensive expertise in supporting major French and foreign multinational companies, both in consulting and tax controversy, anticipating the impact of the proposed recommendations in […]

Clara Maignan

She joined Deloitte Société d’Avocats (French law firm of the Deloitte network) in 2011. She is a director in the Knowledge Management department.