Offshore: definitions, substance, reporting and taxation of a partner resident in France

The word "offshore" has no legal definition. Depending on the context, it refers to an account opened outside the country of residence, a company registered in another country, or a territory that taxes profits lightly or not at all. None of these situations is unlawful in itself, and none has any tax effect on its own.

Taxation depends on factual criteria: where the activity is actually carried out, where the company is managed, where its manager lives, and who controls it. A foreign company with no resources of its own, managed from France by a French resident, is as a general rule taxable in France, either directly or through its partner.

French law has several tools for this: the controlled foreign company rules (articles 209 B and 123 bis of the French General Tax Code, the code général des impôts), article 155 A, abuse of law and penalised reporting obligations, while automatic exchange of information makes these situations visible. This guide describes these mechanisms and refers to the country pages; it does not promise any tax outcome.

The term, which comes from banking vocabulary, is used in four senses that need to be distinguished.

• The offshore account: a bank, payment or digital-asset account opened outside the country of residence. It is lawful, but a French tax resident must declare it.
• The offshore company: a company registered in a state where it carries out little or no activity, often under former regimes reserved for non-residents, such as International Business Companies, which have since been reformed or abolished.
• The offshore jurisdiction: a territory with low or no taxation of profits.
• The offshore financial centre: a place that hosts funds, holding companies or trusts, without this prejudging its tax cooperation.

Low-tax or no-tax jurisdiction and preferential tax regime

There is no official list of "tax havens". French law works by comparison: under article 238 A of the General Tax Code, a foreign structure falls under a preferential tax regime where the tax on profits or income that it bears is at least from 40%¹ lower than the tax it would have paid in France. The assessment is made structure by structure: a country with ordinary taxation may offer a preferential regime to certain companies.

Lists of non-cooperative jurisdictions

Two lists coexist. The European Union list of non-cooperative jurisdictions for tax purposes, revised twice a year, is based on tax transparency, fair taxation (including the absence of facilities for structures without real activity) and standards against base erosion. At its October 2026 revision, it included in particular Vanuatu, Anguilla, Russia and the Turks and Caicos Islands; Panama was removed from it.

The French list of non-cooperative states and territories (article 238-0 A), set by order and updated on 15 April 2026, includes in particular the states on the European list. Listing results in increased withholding taxes, presumptions and exclusion from certain favourable regimes. These lists change often: they should be checked on the BOFiP as of the date of the transaction.

Transparent company

A transparent company is not taxed at its own level: its profits are taxed directly in the hands of its partners, in proportion to their rights, as with certain partnerships or US LLCs depending on their election. For a partner resident in France, it shields nothing: their share is in principle taxable in France.

Company residence and place of effective management

Registration alone does not determine a company's tax residence. Tax treaties use the place of effective management, that is, the place where strategic and day-to-day decisions are actually taken. A company registered abroad but managed from France may be resident there, or have a permanent establishment there.

Permanent establishment

A permanent establishment is a fixed place of business through which a foreign enterprise carries on its activity in a country: an office, a branch, or a person who habitually concludes contracts there in its name. The profits attributable to it are taxable there. Working from one's French home for one's foreign company often creates one in France.

Economic substance

Substance refers to a company's real resources in its country: premises, qualified employees, directors who are present, and expenses incurred and decisions taken locally. Most low-tax jurisdictions have adopted economic substance laws, which require it for certain activities and penalise its absence. Substance protects against requalification; its absence invites it.

Controlled foreign company (CFC) rules

CFC (controlled foreign companies) rules allow a state to tax its residents on the profits of a lightly taxed foreign company that they control, without waiting for a distribution. In France: article 209 B for corporate partners, article 123 bis for individuals.

Automatic exchange of information: CRS and FATCA

Under the OECD Common Reporting Standard (CRS), financial institutions in participating states identify the tax residence of their customers, including the persons who control a company, and every year send information on their accounts to the country of residence. FATCA plays a comparable role with the United States. An account held through a company is therefore, in principle, known to the French tax authorities.

Beneficial ownership registers

The beneficial owner is the natural person who ultimately controls a company; under French law, in particular the person who holds, directly or indirectly, more than more than 25%² of the capital or voting rights. Beneficial ownership registers, accessible at least to the authorities and banks, have largely done away with the anonymous shell company.

OECD global minimum tax

The OECD's Pillar Two introduces a top-up tax ensuring an effective rate of at least 15%³ per jurisdiction, solely for groups whose consolidated turnover reaches at least from €750,000,000⁴. In France, it applies to financial years beginning on or after 31 December 2023 (DGFiP presentation). It does not concern sole traders, family holding companies or small and medium-sized enterprises.

A foreign company changes the legal form of an activity, not the place where it is carried out nor the residence of the person carrying it out.

• The place of activity: a consultant who works from France carries out their activity there, even if the invoice is issued by a foreign company and paid into a foreign account. Invoicing a foreign client, receiving payment outside France and foreign-source income are three distinct notions.
• The manager's residence: it is assessed under article 4 B of the General Tax Code (home or main place of stay, main occupation, centre of economic interests), then under the applicable treaty.
• The company's management: if decisions are taken in France, the company may be taxable there as a resident or through a permanent establishment.

Corporate partner: article 209 B

A company subject to corporate income tax in France that holds, directly or indirectly, more than more than 50%⁵ of a foreign entity subject to a preferential tax regime is taxed on that entity's profits, in proportion to its rights. The threshold rises to more than more than 5%⁶ where the majority of the entity is held by French enterprises acting in concert or related to one another. The mechanism is set aside within the European Union, except in the case of an artificial arrangement, and elsewhere where the entity mainly carries on an actual industrial or commercial activity locally, subject to the reservations in the text.

Individual partner: article 123 bis

A person domiciled in France who holds at least from 10%⁷ of a foreign entity under a preferential tax regime, whose assets are mainly financial, is taxed on that entity's profits as investment income, even without a distribution. The text presumes this holding for the settlor or the deemed settlor beneficiary of a trust, and for anyone who transfers assets to an entity located in a non-cooperative state or territory. A safeguard clause applies to the European Union, excluding artificial arrangements.

Services invoiced through an interposed structure: article 155 A

Where a person established in France provides services remunerated by a foreign structure, the remuneration may be taxed in France in that person's name: automatically if the structure benefits from a preferential tax regime, otherwise where it is controlled by the service provider or does not mainly carry on another industrial or commercial activity (BOFiP). It is the tool most often invoked against consultants who invoice through a foreign company.

Abuse of law

The tax authorities may also disregard an artificial arrangement or one with an exclusively tax purpose under the abuse of law procedure (article L. 64 of the Livre des procédures fiscales, the French Tax Procedure Code). The tax assessed is then increased by 80%⁸, or by 40%⁹ where it is not established that the taxpayer was the main initiator of the arrangement or its main beneficiary (article 1729 of the CGI).

Dividends and remuneration paid to the partner

Failing that, ordinary taxation remains: a French tax resident is taxed on dividends, interest and remuneration paid by a foreign company, subject to the applicable treaty. The absence of tax in the company's country does not reduce the partner's French tax.

Reporting obligations are independent of tax: an account or structure that generates no income must still be declared, and penalties apply even if no tax has been evaded.

• Foreign accounts: any account opened, used or closed outside France during the year, whether you are the holder or merely hold a power of attorney, must be declared with the income tax return on form 3916 or 3916-bis. The account of a foreign company over which you hold a power of attorney is therefore, in principle, covered.
• Penalties: a fine of €1,500¹⁰ per undeclared account, increased to €10,000¹¹ where the account is located in a state or territory that has no administrative assistance agreement with France. Income from undeclared assets may also be subject to specific surcharges.
• Trusts: the administrator of a trust whose settlor, a beneficiary or an asset has a link with France must declare its creation, its amendments and the value of its assets (article 1649 AB). Failure to do so is punishable by a fine of €20,000¹² (article 1736 of the CGI).
• Companies: a company subject to article 209 B, or whose partner falls under article 123 bis, triggers specific filings and supporting documents in France. In its own country, the company remains bound by its local obligations (accounts, annual return, beneficial ownership register, substance report), even where no tax is due there.

These jurisdictions are often associated with the word "offshore", although their regimes differ widely. Each profile details the conditions, periods and sources. The rates cited are the standard rates and say nothing about how a resident partner is taxed in France.

• Cayman Islands: no direct tax (0%¹³), but participation in the automatic exchange of information and an economic substance law. The absence of local tax does not interrupt French tax domicile.
• Bahamas: no tax on profits (0%¹⁴), except for multinational groups falling within the scope of the domestic top-up minimum tax, which excludes small structures.
• United Arab Emirates: federal corporate tax at a rate of 9%¹⁵ on taxable profit above AED 375,000¹⁶. Free zone regimes require qualifying income and real substance; they are not automatic.
• Hong Kong: a territorial system, with a standard rate of 16.5%¹⁷ on profits sourced locally. The exemption of foreign-source income has to be demonstrated and now comes with substance requirements.
• Singapore: corporate tax at a rate of 17%¹⁸, with foreign income treated under conditional rules. A company managed from France does not benefit from them.
• Panama: strict territoriality, which protects the foreign source of an income, not the person who receives it. The country was removed from the European list in October 2026.
• Mauritius: sectoral regimes and a treaty network; a residence permit does not settle the question of French tax residence.
• Cyprus and Malta: Member States of the Union, where the European safeguard clauses of Articles 209 B and 123 bis apply, except in the case of an artificial arrangement. Cyprus now applies a rate of 15%¹⁹; in Malta, the partial refund of tax to shareholders requires a carefully monitored structuring.
• Belize and Seychelles: former International Business Companies regimes that have been reformed, with companies now subject to substance, accounting and reporting obligations.
• Vanuatu: no taxation of company profits (0%²⁰), and listing on the European list of non-cooperative jurisdictions at its October 2026 review.

• A zero rate in a country is always tied to an entity, a type of income and a period. It says nothing about the tax due in France by the partner or the manager.
• Personal tax residence must be settled first. As long as the household, the main activity or the centre of economic interests remains in France, the foreign company does not change the manager's taxation.
• Substance cannot be decreed: a nominal local director, a registered address and a bank account do not amount to effective management.
• Lists of non-cooperative jurisdictions change several times a year. A structure that is acceptable one year may trigger withholdings and stronger presumptions the following year.
• Banks apply their own rules: opening an account for a company with no local activity has become difficult in most financial centres.
• Leaving France while holding company shares may trigger the exit tax; it must be anticipated before any restructuring.
• Any offer presented as "tax-free" or "anonymous" calls for the greatest caution. Independent advice, in France and in the country concerned, remains essential before any decision.

Is owning an offshore company illegal?

No. What is penalised is the failure to declare, the concealment of income taxable in France, or an artificial arrangement designed to avoid tax.

Does a company in Dubai or Hong Kong reduce my tax in France?

Not if you remain a French tax resident and work from France: the activity is carried out there, the company may be taxable there and your income is taxed in your hands. The local regime only applies after a genuine transfer of residence and activity.

Do I have to declare my foreign company's account if it earns me nothing?

Yes, if you are a French tax resident and hold a power of attorney over that account: the obligation concerns the existence of the account, not its income.

Does the global minimum tax apply to my small company?

No. It only concerns groups whose consolidated turnover reaches at least from €750,000,000⁴. A small company is governed by local law and, for its partner resident in France, by the rules described here.

Does a foreign trust place my assets outside the scope of French taxation?

No. A trust linked to France is subject to specific reporting requirements, and its settlor is presumed to meet the holding condition of Article 123 bis.