Legal and compliance
Although the BVIs are now whitelisted by both the OECD and the FATF, France has imposed unilateral measures making the use of BVI structures less attractive for French tax residents. From January 2014 onward, France has increased the corporate tax and withholding tax rates of all French tax residents dealing with the BVIs, with the same restrictions being applied to Bermuda and Jersey. The Philippines were removed from the French blacklist by this update.
Below are the tax implications for all French tax residents using BVI structures (or those located in other jurisdictions blacklisted by the French tax authorities):
- France will impose a capital gains tax of 75% on property located in the British Virgin Islands;
- French-controlled BVI entities are subject to the full French corporate tax rate of 33.33%. There are additional compliance rules for BVI subsidiaries of French entities;
- Companies incorporated in these countries by individual French residents will be considered as transparent for income tax purposes, with all corporate income being applied to the French resident’s income tax bill in the year that they were earned;
- Dividends, royalties and technical services fees paid by French entities to BVI companies are now subject to an increased withholding tax of 75%, more than double the usual 30% non-treaty withholding rate applied by France.
The process of deregistering a company is dictated by the Government. This process will take a minimum of 6 months. Healy Consultants fee to project manage company de-registration is US$1,450. During this 6 months period it is mandatory to maintain a resident company secretary and a legal registered office.
It is important our Clients are aware of their personal and corporate tax obligations in their country of residence and domicile, and that they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.