France tries to reverse the flow of tax exiles

The French government is concerned that it is losing some of its most entrepreneurial and potentially high-earning citizens to countries whose tax regimes are less onerous than its own.Although it does not keep statistics of departing citizens and describes reports of increasing numbers of tax emigrants as "apocryphal", the government is worried enough to have quietly put in place incentives to attract the exiles back.

The Finance Ministry confirmed yesterday that measures used to encourage foreign investment in France, and special terms available to foreigners, such as making transfer and removal costs tax deductible, now applied also to returning French citizens. It confirmed, too, that there are special provisions for brokers moving to France - "they apply to all brokers, foreign and French", said a ministry spokesman.

France has always had its super-rich who retreated to Monaco or Switzerland to avoid the wealth tax, but this is something new. "It's the buzz of the Paris salons," said one weekly magazine recently. "Their voices atremor, they whisper the names of the seriously rich individuals who have chosen to escape to London, Geneva or even Brazil...'

Among the most mobile and tax conscious groups are bankers and brokers, and the self-employed. They are among the groups that have found the French tax system not just burdensome, but avoidable. The finance ministry confirmed this, saying that emigration for tax reasons now involved "not mainly the 170,000 people who are subject to the wealth tax, nor the 300,000 people in the top tax bracket, but independent entrepreneurs".

According to the weekly l'Evenement du jeudi, some dealing houses are trying to buck the system by setting up subsidiaries in London and moving staff there to benefit from lower income tax rates - but it declined to name names. France's top tax rate is more than 56 per cent; Britain's is 40 per cent.

The most immediate reason for the tax emigration are two measures introduced by the Prime Minister, Alain Juppe, last year, which increased the wealth tax by 10 per cent and abolished a rule that set a ceiling on the proportion of income any individual paid in tax.

But the wealth tax is not the only factor. To the generally high rates of tax and national insurance contributions have to be added the recent possibility for all EU citizens to work in each others' countries and a weakening of French inhibitions about working abroad.

In the final communique of this year's summit of the Group of Seven industrialised countries in Lyons, France stressed a clause deploring the proliferation of tax havens.

Since then, Mr Juppe has added a reduction in the top rate of tax to the outline of his five-year fiscal reform programme, starting with a 2 per cent reduction in 1997. In France, where polls put unemployment and poverty at the top of voters' worries, reducing taxes at the upper end would hardly have been considered without evidence that it was needed.

Start your day with The Independent, sign up for daily news emails
Barn owls are among species that could be affected
charity appeal
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
Have you tried new the Independent Digital Edition apps?
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Finance Director

£65000 - £80000 per annum: Recruitment Genius: Finance Director required to jo...

Recruitment Genius: Medico-Legal Assistant

£15000 - £25000 per annum: Recruitment Genius: This is a unique opportunity fo...

Ashdown Group: (PHP / Python) - Global Media firm

£50000 per annum + 26 days holiday,pension: Ashdown Group: A highly successful...

The Jenrick Group: Quality Inspector

£27000 per annum + pension + holidays: The Jenrick Group: A Quality Technician...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas