The hesitation by the French Ministère des Finances to remove the BVI from the blacklisting does not appear to have developed into a mini-crash and a rise in interest rates on the Paris exchanges as foreign financiers offload their French financial assets.

However, it is becoming increasingly important for those investing in French financial instruments to confirm the exact treatment of their investments, as certain are not influenced by any blacklisting, and remain free of withholding tax, and any retorsionary 75% penalty, whilst others do not.

This is due to the very compartmentalised and precise system of French withholding taxation, only part of which has been amended to enable the expropriative 75% rates to be applicable. Interest on many forms of borrowing is not affected by the 75% rate, on a detailed reading of the relevant provisions.

However, certain gains such as those on shares can be caught by the blacklisting rate. It is essential to structure correctly.

In other words, not all gains or profits made by Blacklisted vehicles attract the 75% expropriation; rather than dignifying it with the term tax.

Contact Peter Harris for further details and advice on structuring for ETNC companies and vehicles.

It is curious how certain French commentators assume that financial investments are fixed, and that any reaction to the financial effects of the blacklisting such as a sale must in some manner be calculated, rather than an economic consequence of the expropriative rate.