Jersey and Bermuda were officially removed from France’s list of uncooperative jurisdictions on Friday.
Back in September, Jersey, British Virgin Islands (BVI) and Bermuda were added to France’s list of non-cooperative states, leaving LPs based in these popular private fund domiciles exposed to a 75 percent withholding tax on any gains received from French private equity funds from January 2014 onwards.
To reverse that outcome, officials from Jersey and Bermuda met with senior officials from France’s Ministry of Finance.
Jersey and Bermuda “have increased contact with our departments in order to clarify difficulties that have emerged and to attempt to provide answers in order to fully satisfy France's requests for information,” said the French Ministry of Finance in a statement.
It is unclear whether or not the BVI will also be removed from the blacklist.
However, local media reported the BVI’s premier’s “shock” at the blacklisting back in September. Premier D. Orlando Smith was reported to have said: “What we are doing is investigating to find out what’s the reason as we move speedily to make sure that it is corrected so that we will be off that blacklist and continue to have [a] good relationship with France.”
The BVI Ministry of Finance was unable to respond to a request for comment by press time.
Jersey was initially put on the blacklist because of some outstanding tax information requests that French authorities had not yet received.
Geoff Cook, chief executive of Jersey Finance, the promotional body responsible for the island's finance industry, said being removed from the blacklist “is very welcome news indeed from a finance industry point of view.”
The domiciles feared being on the blacklist would deter LPs and GPs from structuring investments in French funds or French companies through Jersey and Bermuda, said Raphaël Béra, Paris-based tax lawyer with SJ Berwin. He added that private equity vehicles located onshore/in EU jurisdictions (such as Luxembourg) may be preferred to non-cooperative locales by investors.