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In brief

A decree dated 3 February 2023 updated the French list of Non-Cooperative States and Territories (NCST) within the meaning of article 238-0 A of the FTC: the Bahamas and the Turks and Caicos Islands have been added to the previous list (issued by the decree dated 2 March 2022).1

In more detail

As a reminder, the update of the French list of NCST is based on the consideration of three criteria, the decree specifying for each State the criterion that led to the inclusion on the NCST list. The three criteria are (i) the refusal to comply with international standards of tax information exchange, (ii) the facilitation of the creation of offshore structures or arrangements intended to attract profits without any real economic activity (European criterion related to the States included in the European black list) and (iii) the non-compliance with at least one of the other European criteria listed by the Council of the EU, such as tax transparency, the absence of potentially harmful preferential measures or the implementation of the BEPS project.2

The distinction is important insofar as the first two criteria entails the application of all French restrictive tax measures, while the third entails the application of only some of them. However, a certain number of these measures can be avoided through the application of safe harbor rules if the taxpayer can demonstrate that the relevant flows or transactions relate to a genuine economic operation, i.e., the main purpose and effect is not allowing profits and income to be located in an NCST.

The two new States were included on the French list on 3 February 2023 on the basis of the second criterion mentioned above and will therefore be subject to all the restrictive measures provided for in the French Tax Code (FTC) as of 1 May 2023, subject to the application of tax treaties and, where applicable, the safe harbor rules.

At the same time, the European Union’s blacklist was updated on 14 February 2023 and four States were newly added3, i.e., Costa Rica, the Marshall Islands, Russia and the British Virgin Islands. The first three States, which are not on the French list, should not be subject to restrictive measures in France until the publication of a future decree.

As the Marshall Islands were included on the European list on the basis of the second criterion (facilitation of international tax evasion), they should be included on the future French list on this basis and therefore have all the restrictive measures applied. On the other hand, Costa Rica and Russia should be listed on the basis of the third criterion (non-compliance with the other EU criteria) and therefore only certain restrictive measures should be applied.

From a wealth management perspective, the update of this list may have several impacts, notably for companies located in NCST (e.g., the Bahamas or the British Virgin Islands) that hold investments in France (e.g., listed shares, French bonds, etc.). In this case, dividends and interest received may, under certain conditions, be subject to French withholding tax at a rate of 75%. Furthermore, in case of sale of assets, capital gains may also be subject to French taxation at a rate of 75%, even if the holding company does not hold a substantial interest (less than 25% of the profit rights). In order to avoid such taxation of capital gains, it will be necessary to be able to demonstrate that this structuring has mainly a purpose and an effect other than to allow the localization of profits in an NCST, which may exclude pure holding companies.

1 The list resulting from the decree of 3 February 2023 therefore includes the following 14 States: British Virgin Islands, Seychelles, Anguilla, Panama, Bahamas, Turks and Caicos Islands, Vanuatu, Fiji, Guam, U.S. Virgin Islands, Palau, American Samoa, Samoa, Trinidad and Tobago.

2 BEPS: Base Erosion and Profit Shifting.

3 The blacklist therefore includes the following 16 States: American Samoa, Anguilla, Bahamas, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, Turks and Caicos Islands, U.S. Virgin Islands, Vanuatu, British Virgin Islands, Costa Rica, Marshall Islands and Russia.


Charles Baudoin joined the Tax department of Baker McKenzie in Paris in 2015. Prior to joining Baker McKenzie, Charles was an associate in the tax department at another global law firm in Paris from 2007 to 2014.


Philippe Fernandes is an Associate in Baker McKenzie, Paris office.


Iris Bouffartigue is a Professional Support Lawyer in Baker McKenzie's France office.

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