The message could not be clearer: The number of requests by French citizens to leave France are suddenly up by 400 to 500 percent. As far as my tax law business is concerned, we used to have three to five such cases a year, and we are already facing more than 20 this year. We are witnessing an explosive rise in tax exile since April 2012. On a national scale, the number of tax exiles was previously estimated at some 1,000 per year; today, it is expected to multiply by as much as five. It’s like repealing once more the Edict of Nantes, in the sense that these departures will impoverish French business and industry.
Interestingly, the profile of the people now leaving France has completely changed. We still deal with aging entrepreneurs who would like to sell their business and retire without being soaked by the government. But this number is no longer increasing, in particular since the “Exit Tax” was introduced on capital gains (19 percent, plus another 15.5 percent in payroll taxes).
Currently, however, we are seeing a lot of young entrepreneurs, not necessarily wealthy, but who would like to get wealthy and will not hand over their wealth to the government. The hopeful tax exiles are therefore getting younger: today they are aged between 35 and 50, and not between 55 and 70, as was seen before. The granddad fiscal exodus is over!
More disquieting still, they come from all sectors—mainly from the computer industry and the Internet, as these activities are immaterial and easier to move. But there is a bit of everything. They come from all walks of life: consulting, industry, services. The most recent example from my firm was a client who provided services to senior citizens. He sold his French business and checked out to move it elsewhere. The motives have also changed. These young entrepreneurs are leaving today to develop their business abroad, as French taxation has become unbearable.
Friday, December 28, 2012
France: Is Anyone There?
If you THINK. If you HOPE. If you WONDER what is about to happen in CA with the raising of taxes on the rich, this article will dispel all doubt.