The OECD distinguishes three lists for tax heavens: The black one, for fiscally uncooperative countries. The grey one, for countries who have promised to obey the new rules but still haven’t applied them entirely. Finally, the white one, for countries who have made significant efforts and whose rules comply with those of the OECD. This classification does not lead to any sanction, since this is left to the States’ responsibility.
Consequently, France has established the list of Non Cooperative Countries and Territories (NNCT) which are defined according to the following criteria:
- Having been evaluated by the OECD regarding to the sharing of information for fiscal uses
- Not having signed an agreement on mutual administrative assistance with France, nor having signed a similar agreement with at least 12 other countries or territories.
The last update of this list was in January 2014, when Bermuda and Jersey Islands were removed from the list, on the reason that discussions with these countries had enabled to find solutions concerning the practical aspects of the agreement of information sharing.
Currently, France judges as fiscally uncooperative countries Botswana, Brunei, Guatemala, Marshall Islands, the Virgin Islands, Montserrat, Nauru and Niue.
We notice that Botswana did sign a fiscal agreement with France with regard to income tax.
This classification has important fiscal consequences for the nationals of these countries and territories, either they are private individuals or companies.
- For each handover concluded free of charge through a trust, a 60% tax rate applies when the trust manager is subjected to the law of a NNCT
- Real estate capital gains realized by natural or legal persons domiciled, established or formed in a NNCT were submitted to a 75 % tax rate until 2014.
- The French fiscal rules for parent companies and subsidiaries don’t apply to companies established in a NNCT.
- Interests, dividends and royalties going to persons from a NNCT are also submitted to 50 % tax rate
- The possibility for the corporate bodies owning buildings in France and located in a NNCT to benefit from the exemption of the 3 % annual value-based taxation is still uncertain. This exemption is granted only if the corporate bodies are located in a country which has signed a fiscal agreement with France. By definition, the NNCT should be excluded from this list. And yet, the question is relevant for Botswana.
The 2015 Finance act has removed the 75% tax rate on capital gains because it was considered as excessive. From now on, every nonresident will be charged a 19% tax rate on capital gains no matter if he lives in the European Union, outside the European Union or in a NNCT.
However, it is likely that the tax rate will change next year.