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Private equity investment company scheme
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TAXATION AT THE REDUCED RATE OF 10% ON INTEREST FROM SECURITIES GIVING
ACCESS TO CAPITAL
In addition to the almost total exemption for dividends (see § holdings), private equity companies benefit from a reduced tax rate of
10% for financial earnings and capital gains from securities “giving access to capital”. Specifically concerned by this reduced tax rate
are convertible bonds, bonds with warrants (OBSA), convertible bonds and/or exchangeable for new or existing shares (OCEANE), bonds
redeemable in shares (ORA), bonds with redeemable share subscription warrants (OBSAAR)...
NB: the reduced rate of 10% applies to the gross amount of interest received; expenses (management fees, costs of refinancing... ) remain deductible under ordinary
law for determining taxable income at the standard rate of 20%.
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TOTAL DEDUCTION OF FINANCIAL EXPENSES
Saint-Martin tax regulations do not contain any provision to prevent the deduction of financial expenses related to the acquisition of
shareholdings or securities.
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ABSENCE OF ANY WITHHOLDING TAX ON INTEREST FROM SAINT-MARTIN SOURCES
PAID TO NON-RESIDENTS
Interest paid to beneficiaries resident outside Saint-Martin does not give rise to the application of any withholding tax at the time of
payment.
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POSSIBILITY OF OFFSETTING WITHHOLDING TAX LEVIED ABROAD EVEN IN THE
ABSENCE OF A TAX TREATY
A company is paid interest during the year ended 31 December N, some of which is eligible for the reduced rate of 10% (interest from
countries A and B) according to the following table:
FOCUS ON
Country
of origin
Gross
amount
(1)
Tax levied in the
country of origin
(2)
Net income
(3)
Saint-Martin tax
on income
(4)
Tax credit applied to corporate tax
due in Saint-Martin
On corporate tax
due for the year N
(5)
On corporate tax for
the following years
(6)
Country A €400 000
€60 000
€340 000
€40 000
€400k x 10%
€28 000
€12 000
Country B €600 000
€120 000
€480 000
€60 000
€600k x 10%
€42 000
€18 000
Country C €200 000
€10 000
€190 000
€30 000
(€200k- €50k) x 20%
€7 000
€3 000
Country D €500 000
€100 000
€400 000
€60 000
(€500k – €200k) x 20%
€42 000
€18 000
Comments:
Column 4:
the amount of tax credit is in any event capped at the amount of Saint-Martin tax on the taxable income in question (difference between,
on the one hand, the gross amount mentioned in column 1 and, on the other hand, expenses deductible from income under Saint-Martin domestic
legislation such as management expenses and refinancing charges). For shares eligible for the reduced rate of 10% (Country A and Country B) such
charges are deemed to be nil.
Column 5
et
Column 6:
Tax deducted at the source in the foreign country, capped if appropriate (see Col 4), is offset for up to 70% of the amount of
corporate tax due under the year N; the balance (30%) increased, if appropriate, by the fraction that could not be offset under the year N, is carried forward
to following years indefinitely and for an unlimited amount.
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MARCH 2015 EDITION
VERY FAVORABLE CORPORATE TAX