Tax Expatriation

The tax expatriation is the step which consists for a person or a company to change tax Résidence legally in order to put itself in a more favorable tax situation. This expatriation thus supposes that the concept of tax Résidence exists in the tax mode considered and generally implies the transfer of this one in a country or a special economic zone offering a taxation relatively more favorable (some of these countries or zones are qualified, often pejoratively, of tax shelters).

The term of “ tax exile ” is also often used in an interchangeable way. Yann Kergall prefers the term to him “expatriation”, judging the direction of the word Exil too extremely.

The tax expatriation should not be confused with the tax avoidance, which it is illegal in the majority of the countries.

Use

The tax expatriation supposes that the person concerned finds an advantage sufficient in the fact of expatrier, and thus interests first of all the people having resources important and likely to be taxed heavily because of a tax mode which is unfavourable compared to the selected country of emigration. One thus meets the practice in employers and the Actionnariat, in the high level sportsmen (player of Tennis, champions of Formule 1, Footballeur S…) but also in the artists (Singer S, Actor S). It can also exist for the workers (independent or paid), the company founders and sometimes even the easy pensioners who decide to make play tax competition.

Consequences

These migrations of natural persons have as a consequence:

  • for the starting State, to decrease its resources. If he wants to maintain a fiscal charge equal, he is constrained to increase the taking away of the remaining taxpayers. He can also undergo the disappearance of the economic activities which carried on or financed the person on her ground.
  • for the State of arrival, to bring an additional budgetary resource (lower than than would have touched the starting State, but always appreciated coming somebody which could as well have settled elsewhere) and possibly new economic activities, particularly when the expatriate is a Entrepreneur: Thus Denis Payre which created a new company in Belgium.

Within the European Union, part of these economic migrations could cease if there were a greater tax co-operation between the States.

French expatriates

France undergoes important a tax Concurrence, desired or not, because of its fiscal charge: Solidarity tax on fortune, income tax at the rate of 40% on the marginal section of the incomes plus 11% of loads and social debts (known as CSG CRDS), tax on the Appreciation S, Death taxes as well as rather important social samples (Social security, contributions retirements…).

In parallel, several recent phenomena facilitate the tax expatriation of the French:

  • the creation of the Space Schengen, which makes it possible to the French citizens to freely settle in another State
  • the improvement of transport, thus for example London and Brussels are not any more but with 2:35 and 1:25 respectively of the center of Paris by the train
  • the integration of the banking systems and data processing, which facilitates the follow-up of the investments and the exchanges of capital

Applicable conditions and rules

To lose the quality of resident tax in France, the expatriate must usually reside out of France theoretically more than 6 months, that is to say more than 183 days per annum (the exact rule being able to vary from one country to another according to the tax conventions). It is on this point that the litigations are most numerous, because it acts for the expatriate who would have kept an account or goods in France to prove his real residence in another country: can be used banking extracts, the place of schooling of the children, the notes of displacements, the tickets of Avion S, the invoices of Téléphone S, etc It is the National management of the checks of tax situation (DNVSF) which is given the responsability to follow the files of the people suspected of simulated tax expatriation.

Destinations

For expatrier, the French choose usually French-speaking destinations and/or geographically close relations, the choice being carried out according to the tax objective and of the conditions of receptions:

  • the Suisse (thanks to its tax Forfait) attracts very great fortunes and the professionals having their incomes out of the country (sporting, actors, singers)
  • the Belgium has the favors of the owners and reprocessed, who are given a taxation on the financial incomes reduced, of the absence of STF and a great proximity with Paris.
  • the Italy is chosen by the pensioners who wish to escape the Death taxes.
  • the the United Kingdom and the French-speaking Canada (which offers facilities of emigration for the French) are often chosen by those which wish to found a company

Contrary to a popular belief, Monaco is not a privileged destination for the French citizens, because those which settle there are subjected to the direct impositions exactly as if they were in France (following tax agreements signed with France in 1963).

Figures

The Marini report/ratio evaluates to 83,3 million euros over six years the direct loss for the State because of this tax expatriation. Quantify minimum for which it is necessary to add the taxes on land and the death taxes left in smoke, as well as VAT not perceived on the goods consumed by these expatriates and the taxes not perceived on the jobs created abroad by the exiled contractors.

According to the economist Christian Saint-Etienne, the tax exile is equivalent to a colossal loss for the State : According to its calculations, if the capital which fled because of the STF had been invested in France, they would have paid between 6 and 8 billion € per annum in VAT or corporation taxes. He deplores that while wanting to try to gain 3 billion € more per annum the tax department two to three foix .

According to the law firm CMS-Office Francis Lefèbvre, into 5 years the threshold of richness from which the French owners plan to leave was divided by 5 between 2002 and 2007.

The number of French tax expatriates is difficult to establish:

  • For the STF, the tax authorities locates it around 350 debtors per annum, a figure to be paid at the same time to the 300  000 indebted people of this tax but also with the 305 hearths of which the inheritance exceeds 50 million euros. This figure is however incomplete because it takes into account only the taxpayers paying the STF already, which excludes for example the traditional case from the head of undertaking profiting from the exemption under professional good and which leaves the country by selling its company. In a report on the STF, the television program Capital estimates it that a third of the French multimillionaires is expatrient.
  • With regard to the Income tax or the Death taxes, there do not exist precise figures. In the same way for the private individuals who leave France to create a company of the more advantageous tax conditions.

In classification 2005 of 300 larger fortunes of Swiss established by the magazine Assessment , one finds about thirty French.

For Christian Chavagneux, editor association of Economic Alternatives, they are 10% of the revenues from taxes each year which are not recovered, those having to discharge them being exiled.

Celebrities

French sportsmen

Singers

Actors and artists

Authors

Employers & shareholding

  • Jacques Airspeed indicator (Crossroads) with Brussels
  • Thomas Bata, mark of shoe Bata, resides in Switzerland
  • the family Jean Baud (marks Franprix and Leader Price, between 2 to 3 billion CHF), resides in Switzerland.
  • Lotfi Belhassine, former president d' Air Freedom, contractor settled in Belgium with Ixelles. He states to have flees France because the STF accounted for 93% of its incomes
  • Claude Berda, AB Groupe, in Switzerland
  • Famille Bich, of the founder of the group Bic, in Switzerland
  • Corinne Bouygues, with Geneva
  • Pierre Castel, chairman of the group Castel Brothers Crystalline owner of the Eaux, Vichy Célestins and Saint-Yorre, resides close to the Lac Léman in Switzerland.
  • Georges Cohen, data processing and armament, resides in Switzerland.
  • Bernard Darty, founder of Darty, resides in Belgium
  • Jean-Louis David, founder of the hairdressing salons éponyme, exiled in Switzerland
  • Famille Defforey, at the origin of the company Carrefour, in Switzerland
  • the family Paul-Georges Despature, owner of the mark Damart and Somfy, resides in Switzerland.
  • Pierre-François Grimaldi (IBazar), resides in Belgium
  • Eric Guerlain in Great Britain
  • Daniel Hechter, creator and installed in Switzerland
  • Philippe Harrowing, group Harrowing
  • Philippe Jaffré, former president of Elf
  • the billionaire Robert Louis-Dreyfus with Zurich in Switzerland.
  • the family Jean-Claude Mimram, resides at Gstaad in Switzerland.
  • the family Gerard Mulliez (owner of Auchan, Decathlon, World Fitted carpet, Green light and Kiabi), resident with Néchin or Templeuve in Belgium.
  • the family Nonancourt, owner of the champagnes Laurent-Perrier, resides in Switzerland.
  • Denis Payre, founder of Business Objects, resides in Belgium where it started a new business, Kiala, which engaged 100 people
  • the family Peugeot (between 5 and 6 billion CHF), resides in Switzerland
  • Jean Pigozzi, heir to the cars Simca, resides in Switzerland.
  • Michel Reybier, former chairman of Justin Bridou, installed in Switzerland
  • Jacques Tajan, former first appraiser of France
  • Antoine Zacharias, former chairman of Vinci
  • Roger Zannier, with the head of Kookaï or Absorbed, live in Cologny in Switzerland

Expatriates of other nationalities

References

See too

Internal bonds

External bonds

  • These rich person who leave France, the Point , September 1st, 2005.

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