Jersey received word from the French Finance Ministry that the island will be removed from France’s list of uncooperative jurisdictions “in due course”, according to a statement from Jersey Finance, the promotional body responsible for the island's finance industry.
In September, France added Jersey, British Virgin Islands (BVI) and Bermuda to its 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 met with senior officials from France’s Ministry of Finance last week and were told that Jersey’s efforts to ensure timely tax information requests have been enough to remove them from the blacklist.
Jersey was initially put on the blacklist because of some outstanding tax information requests that French authorities had not yet received.
But Jersey Finance chief executive, Geoff Cook, said these information requests were being appealed in Jersey’s courts. And with those cases due to be heard shortly, Jersey can demonstrate to France’s satisfaction that it is exchanging information effectively.
“The focus now is on ensuring that the French authorities are happy with the speed and efficacy of how Jersey responds to information requests, under Jersey and France’s existing tax information exchange agreement,” said Cook.
Blacklisting would likely deter structuring investments in French funds or French companies through non-cooperative jurisdiction, 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.
It is unclear whether or not the BVI and Bermuda will also be removed from the blacklist.
Both the BVI and the Bermudan Ministries of Finance were unable to respond to a request for comment by press time.