France's Ayrault Denounces Tax Exiles

By Editorial 14 December, 2012

During a national conference on poverty, French Prime Minister Jean-Marc Ayrault vehemently denounced French tax exiles for avoiding "solidarity" with their fellow citizens.

Alluding to French actor Gérard Depardieu’s decision to take up residence in Belgium, Ayrault insisted that those seeking exile abroad do not do so out of fear of becoming poor, but simply because they are seeking to become even richer.

Emphasizing that it is not possible to fight poverty if those who have the most, and sometimes a lot, do not show solidarity and a bit of generosity, Ayrault said that luckily only a few are choosing exile "to exempt themselves from solidarity" with other Frenchmen.

Ayrault underlined the importance of combating all forms of fraud, whether small or large, and in particular tax evasion.

The minister explained that in order to resolve the issues of poverty and social inequalities, political choices must be made, notably in terms of fiscal policy. Here, Ayrault defended the Socialist government’s tax choices since the beginning of their term in office, acknowledging that an effort is indeed required from France’s wealthiest and from very large companies in France.

France’s 2013 finance bill is a prime example of the efforts demanded of the rich. The bill provides for an exceptional 75% contribution to be imposed on income in excess of EUR1m (USD1.3m) per beneficiary and introduces a marginal income tax rate of 45% on income in excess of EUR150,000. The text also aligns the taxation of income from capital with the taxation of income from work and increases wealth tax next year: an arsenal of tax measures that are quite blatantly and unashamedly “anti-rich”.

Even though Belgium is no longer considered internationally to be a so-called "tax haven," a jurisdiction deemed uncooperative in tax matters, as it has partially lifted its traditional banking secrecy, it undoubtedly continues to attract entrepreneurs and the wealthy. There is no wealth tax, gains from investment assets are not subject to capital gains tax and the system of taxing corporate profits is one of the most attractive in Europe. While the headline rate of corporation tax is 34%, in line with the headline rate in France, companies benefit from generous deductions, and a notional interest deduction is available to level the playing field between companies that borrow and those that self-finance, and is calculated on the amount of equity.

Depardieu is not the first well-paid Frenchman to seek tax exile in Belgium following President Hollande's election victory. Back in September, LVMH Chief Executive Bernard Arnault applied for Belgian nationality, allegedly to avoid or reduce taxes payable in France.

In response, French Socialist deputies now plan to set up a working group to examine the "real problem" of tax exiles, and to present their proposals at the beginning of 2013.

Tags: Individuals | Expatriates | Capital Gains Tax (CGT) | Tax | Investment | Belgium | Tax Avoidance | Fiscal Policy | Banking | Entrepreneurs | Corporation Tax | Banking Secrecy | Tax Rates | France | Individual Income Tax |


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