COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN COUNCIL Commission opinion pursuant to Article 355(6) of the Treaty on the Functioning of the European Union  on the initiative of the French Government to amend the status of Saint-Barthélemy with regard to the Union
Date: 2010-10-18
Institutions: European Commission
Subjects: France, application of EU law, euro, overseas countries and territories, tax system

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EUROPEAN COMMISSION  

Brussels, 18.10.2010 
COM(2010) 559 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN COUNCIL 

Commission opinion pursuant to Article 355(6) of the Treaty on the Functioning of the 
European Union 

on the initiative of the French Government to amend the status of Saint-Barthélemy 
with regard to the Union 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN COUNCIL 

Commission opinion pursuant to Article 355(6) of the Treaty on the Functioning of the 
European Union 

on the initiative of the French Government to amend the status of Saint-Barthélemy 
with regard to the Union 

The French Republic has informed the European Council of an initiative to have the status of 
the island of Saint-Barthélemy amended with regard to the Union, pursuant to Article 355(6) 
TFEU.  This  territory  is  currently  subject  to  the  combined  provisions  of  Articles  355(1)  and 
349  TFEU.  France's  initiative  is  that,  as  of  1  January  2012,  it  should  have  the  status  of  the 
overseas  countries  and  territories  (OCT)  referred  to  in  Article  355(2)  of  the  TFEU  and  the 
fourth part of the same Treaty.  

Article 355(6) of the TFEU provides that "The European Council may, on the initiative of the 
Member State concerned, adopt a decision amending the status, with regard to the Union, of 
a Danish, French or Netherlands country or territory referred to in paragraphs 1 and 2. The 
European Council shall act unanimously after consulting the Commission". 

In  line  with  this  provision,  on  [date  to  be  specified],  the  European  Council  consulted  the 
Commission on this initiative.  

The  Commission  examined  France's  initiative  with  regard  to  the  impact  of  this  change 
pursuant  to  the  provisions  of  Article  355  TFEU.  Pursuant  to  these  provisions  and  from  the 
entry  into  force  of  the  change  of  status,  European  Union  law  will  no  longer  apply  to  the 
territory of Saint-Barthélemy, with the exception of the fourth part of the TFEU. 

In the light of this examination, the Commission takes the view that two areas require further 
comment in this opinion: currency and taxation.  

Currency 

The documents submitted by France to the European Council state that France wishes to see 
the  euro  continue  to  be  used  in  Saint-Barthélemy.  A  currency  agreement  will  have  to  be 
concluded between France and the European Union to this end, to ensure that Community law 
continues to be applied in areas essential to the functioning of Economic and Monetary Union 
(in  particular,  currency,  financial,  money-laundering  and  counterfeiting  legislation),  in  line 
with agreements already existing or being negotiated.  

In the explanatory document accompanying its initiative, France expressly stated that it "will 
undertake the necessary commitments for the application, in Saint-Barthélemy, of the rules on 
combating  counterfeiting,  the  circulation  of  illicit  capital  and  money  laundering  and 
regarding administrative cooperation". 

The Commission has taken note of this undertaking and, at the appropriate time, will advise 
the  Council  to  open  negotiations  for  the  conclusion  of  a  currency  agreement  between  the 
European  Union  and  France,  pursuant  to  Article  219(3)  of  the  TFEU.  This  advice  will 
include,  in  particular,  a  Commission  negotiating  brief  for  this  matter.  In  line  with  the 

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convention for the preparation of currency agreements, the European Central Bank should be 
associated with the negotiations.  

Tax system 

In the interests of the smooth operation of the internal market, the Union adopted a European 
Policy  on  Promoting  Good  Governance  in  Tax  Matters  in  Commission  Communication 
COM(2009)201.  One  of  the  goals  of  this  policy  is  to  prevent  international  fraud  and  tax 
evasion, and it also contains a "Code of conduct for business taxation" to tackle harmful fiscal 
competition.1  

In  the  area  of  fiscal  cooperation,  the  Union  has  adopted  Council  Directive  77/799/EEC 
concerning mutual assistance by the competent authorities of the Member States in the field 
of direct taxation2, and Council Directive 2003/48/EC of 3 June 2003 on taxation of savings 
income in the form of interest payments.3 

The  Commission  takes  the  view  that,  following  Saint-Barthélemy's  change  of  status,  the 
provisions of the agreement must ensure that the mechanisms in these two directives on fiscal 
assistance and cooperation and on the taxation of savings continue to apply to the territory in 
question. 

France, in the explanatory document enclosed with its own initiative, expressly states that it 
will "take all measures judged necessary for the application, in Saint-Barthélemy, of the rules 
on fiscal transparency". 

The Commission notes this undertaking and will, at the appropriate time, advise the Council 
to launch negotiations with a view to concluding the corresponding agreements, on the basis 
of Article 218 of the TFEU. This advice will include, in particular, a Commission negotiating 
brief for this matter. 

The  Commission  would  remind  France  of  the  undertaking  relating  to  harmful  fiscal 
competition it made, together with the other Member States, in the above-mentioned Code of 
Conduct.  According  to  this  text,  the  Member  States  undertake  to  promote  the  adoption  of 
principles  to  eliminate  harmful  fiscal  measures  in  territories  other  than  those  to  which  the 
Treaty  applies.  The  Commission  assumes  that  this  undertaking,  relating  specifically  to  such 
territories, will also apply to Saint Barthélemy from the moment when the amendment of its 
status comes into force. 

Other areas 

For reasons of completeness, the Commission would like to point out that the change of status 
could  also  necessitate  technical  amendments  in  various  fields  of  secondary  legislation,  in 
particular  those  relating  to  the  relationship  between  the  OCT  and  the  European  Union, 
regional policy, employment, agriculture, maritime and customs policy. These changes should 
be made in such a way as to take into account the change of status in line with the planned 
timetable (change of status on 1 January 2012). 

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Resolution of the Council and the Representatives of the Governments of the Member States, meeting 
within the Council of 1 December 1997 on a code of conduct for business taxation, OJ C 2, 6.1.1998, p. 
2. 
OJ L 336, 27.12.1977, p. 15. 
OJ L 157, 26.6.2003, p. 38. 

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Conclusion 

The change of status of Saint-Barthélemy does not raise any particular difficulties with regard 
to EU law, although certain technical amendments to secondary legislation will be needed. In 
order to protect the Union's interests beyond the change of status, the Commission considers it 
important for agreements to be concluded between France and the European Union on: 

- keeping the euro and the legislation on the smooth functioning of Economic and Monetary 
Union; 

- good fiscal governance, specifically mutual fiscal assistance and cooperation in the area of 
business taxation. 

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