The tax treaty between the State and Saint-Martin: a 2010 text on income taxes

Saint-Martin (French part) is an overseas collectivity with tax jurisdiction. Its agreement with the French State, signed on December 21, 2010, entered into force on May 1, 2011, and covers income tax, excluding social security contributions. It caps withholding tax at 15% on dividends and 10% on interest, reserves royalties for the beneficiary's State, and provides for a tax credit for both parties.

A 2010 text approved by an organic law

According to the French Official Tax Bulletin (BOFiP), Saint-Martin is an overseas collectivity governed by Article 74 of the Constitution, whose tax authority derives from the Organic Law of February 21, 2007. The agreement was signed in Saint-Martin on December 21, 2010, between the French State and the collectivity. Organic Law No. 2011-416 of April 19, 2011, approved it on the metropolitan side (Official Journal of April 20, 2011), and the agreement entered into force on May 1, 2011.

The administrative list classifies the convention under "IR" and mentions separately a specific agreement of December 23, 2009 for the exchange of information.

According to Article 22, the convention applies, for income taxes collected by withholding at source, to amounts taxable from 1 January 2010 and, for others, to income relating to any calendar year or financial year beginning from that date.

Maximum deductions and key rules

Resident: a rule dated July 15, 2007

Article 4 defines a resident as someone liable for tax due to their domicile, residence, or place of management. For an individual with dual residence, paragraph 2 lists, in order, their permanent home, center of vital interests, habitual residence, and then the agreement of the competent authorities. According to Article 4, paragraph 1(d), subparagraph (c) and the second sentence of subparagraph (a) do not apply to individuals who can demonstrate that their tax domicile or place of effective management was located in Saint-Martin on July 15, 2007, the date on which the collectivity began exercising its tax jurisdiction.

Elimination of double taxation: tax credit and protocol

Article 20 grants, in each party, a tax credit deductible from local or state tax, capped at the tax corresponding to the income concerned. The protocol specifies two points specific to Saint-Martin:

• point 5: the tax of persons established in Saint-Martin and resident in the State is calculated according to the rules applicable to persons domiciled or having a business in Guadeloupe; ;
• Point 7: Profits attributable to a permanent establishment located in Saint-Martin of a person resident in the State are exempt from the State's corporate tax, unless they are subject in Saint-Martin to taxes that are more than half lower than those to which their beneficiary would have been subject if he had been a resident of Guadeloupe.

Amicable procedure and denunciation

The case must be submitted within three years of the first notification of the measure (Article 21 § 1). According to Article 23, the agreement is concluded without time limit; after five calendar years following its entry into force, each party may notify its wish to terminate it; this termination must be authorized under the same conditions as those provided for entry into force.

Limitations of this sheet

It does not detail Articles 6 to 9, 15, 16, and 18, paragraphs (a) and (c) of Article 4(1), the 2009 agreement, the anti-abuse clauses, or points 1 to 4 of the protocol. Its applicability to real estate wealth tax is not established: Article 2 concerns income taxes. The local authority's rights should be confirmed with a local professional.