Doing business in Saint-Martin

Very favorable

corporate tax

Corporate tax is only imposed on profits made in Saint-Martin.The normal rate is 20%while the reduced rate, which

has a very wide scope of application (revenues from industrial property rights, trademarks, copyright...), is set at

just 10%. Dividends are usually almost totally exempt and certain financial products are eligible for reduced rates.

Finally, losses can be carried forward indefinitely and for unlimited amounts.

A narrow-base tax rate

limited to profits made

in Saint-Martin for all types

of companies

Corporate tax is calculated only on the profits of businesses

operating in Saint-Martin.

This rule applies generally: it applies equally to foreign

companies that decide to do business in Saint-Martin

through an establishment that does not have a separate

legal identity (e.g. branch) and to foreign companies that

choose to create a subsidiary in Saint-Martin.

In the first instance, the foreign company is taxed as

a company “non-resident in Saint-Martin” on earnings

from business activity in Saint-Martin only. In the second

instance, the subsidiary is taxed as a company “resident

in Saint-Martin” on the same earnings.

Hence, whatever the type of company doing business

in Saint-Martin, only local earnings are taxable.

For the purposes of this rule for example, the following

foreign companies are taxable in Saint-Martin:

the operator of an establishment in Saint-Martin that

does not have a separate legal identity such as a branch,

agency, factory or any other facility of a permanent

nature having its own autonomy

or, failing such an establishment, a representative in

Saint-Martin that does not have a separate professional

legal identity (dependent agent).

Conversely, if the foreign company chooses to set up a

branch in Saint-Martin, the latter is exempt in respect

of profits derived from an establishment outside Saint-

Martin or from the activity of a dependent agent located

outside Saint-Martin.

SPECIAL CONDITIONS FOR “FRENCH” COMPANIES

A tax treaty between the French State and the

Collectivité

of Saint-Martin signed on 21 December 2010 lays down the

relevant principles. Special rules also exist for companies that

choose to transfer their registered office from a European

or overseas territory of France to Saint-Martin.

Taxable earnings are

calculated simply

Income subject to corporate tax (

Impôt sur les sociétés - IS

)

is calculated by deducting eligible expenses from income.

Income comprises all of the proceeds from business,

the sale of goods and the provision of services.

Deductible expenses are expenses related to the com-

pany’s business. They include the purchase of goods,

“overheads” (including employee salaries and contribu-

tions, financial expenses, outsourcing and other current

operating expenses, taxes and duties... ), depreciation

and provisions.

In general, in order to be deductible from taxable profits,

overhead costs must be incurred in the interest of the

business, in other words, be related to normal mana-

gement of the business, be regularly recorded and be

supported by adequate documentation. These expenses

are deductible from income in the year in which they

are incurred, regardless of the date of actual payment.

However, special rules apply to certain expenses:

research and development costs: the company can

decide whether operating expenses for scientific or

technical research are immobilized or immediately

BUSINESS TAXATION

DOING BUSINESS IN SAINT-MARTIN