I: Taxable profits and income

Interest, arrears and other income from bonds, debts, deposits and guarantees, royalties from the assignment or concession of operating licences, patents, trademarks, manufacturing processes or formulas and other similar rights or remuneration for services, paid or due by a natural or legal person domiciled or established in France to natural or legal persons who are domiciled or established in a foreign State or territory outside France and are subject to a privileged tax regime there, are only admitted as deductible expenses for tax purposes if the debtor provides proof that the expenses correspond to actual transactions and that they are not abnormal or exaggerated in nature.

For the application of the first paragraph, persons are considered to be subject to a privileged tax regime in the State or territory in question if they are not taxable there or if they are subject there to taxes on profits or income the amount of which is 40% or more lower than the tax on profits or income for which they would have been liable under the conditions of ordinary law in France, if they had been domiciled or established there.

However, interest, arrears and other income from bonds, debts, deposits and guarantees, with the exception of those due in respect of loans taken out before 1 March 2010 or taken out on or after that date but treated in the same way as the latter, as well as royalties from the assignment or concession of operating licences, patents, trademarks, manufacturing processes or formulas and other similar rights or remuneration for services, paid or due by a natural or legal person domiciled or established in France to natural or legal persons who are domiciled or established in a non-cooperative State or territory within the meaning of Article 238-0 A, do not qualify as deductible expenses for tax purposes, unless the debtor provides the proof referred to in the first paragraph and demonstrates that the transactions to which the expenses correspond mainly have a purpose and effect other than enabling the localisation of these expenses in an uncooperative State or territory.

The first and third paragraphs also apply to any payment made into an account held with a financial institution established in one of the States or territories referred to, respectively, in the first and third paragraphs.