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France ‘loses one million jobs’ due to tax exiles

France has lost around one million jobs in recent years as a result of entrepreneurs and business leaders fleeing abroad to escape the French tax man, a new report has claimed.

France 'loses one million jobs' due to tax exiles
Workers protesting over job cuts has become a common sight in France. Photo: Jean-François Monier/AFP

According to the liberal think tank Concorde, over the last 20 years France has missed out on one million new jobs because of the knock-on effects of French people going into tax exile.

Concorde bases its finding on the fact that that 3 percent of the two million French expatriates living abroad now own companies, running firms with at least ten staff on the payroll.

If these entrepreneurs had not fled L'Hexagon, as France is often referred to, then there would be now be an extra 60,000 companies employing more than 70,000 employees, the think tank concludes.

But because the flight began 20 years ago, Concorde works out a hypothesis that these "lost companies" would have employed around 35 people each. It then divides this in two because of the fact that these companies could not have been set up or developed in France.

The result: One million jobs lost as a result of tax exile.

The figures are of course only estimates based on a theory, but nevertheless, the report, published in right-leaning daily Le Figaro comes at a time when a debate over taxing high earners continues to rage in France.

After much hullabaloo, President François Hollande’s flagship 75 percent tax rate on top earners looks like it will never see the light of day. That appears to be good news for people like actor Gérard Depardieu, who was heavily critical of the proposal before he upped sticks and moved to Russia.

Stories of wealthy French nationals fleeing abroad have been a regular feature of the right-leaning press in both France and even Britain in recent months, but in reality there is little reliable data to prove that the number of tax exiles has increased since the socialist government came to power last June.

In its study, Concorde uses a series of indicators to suggest an acceleration in the number of people seeking tax exile last year, including the fact that the sale of property worth more than €1.5 million has shot up.

However, in an interview with The Local earlier this month Fabienne Petit, director of international activities at French firm Humanis, which works with French expatriates, said it was a myth that the French were leaving to go abroad for tax reasons.

Even so, politicians on France’s right are desperate to find some clear data that Hollande’s tax policies are forcing wealthy French people to seek better financial climes abroad.

President of the opposition UMP’s Finance Committee Gilles Carrez has already found out that between March 2011 and December 2012, 250 French nationals paid an exit tax upon leaving France.

However the tax is only payable by those who hold over €1.3 million worth of shares, so the stats again are inconclusive.

But Carrez wil not give up, vowing to go back the Finance Ministry to get hold of clear data.

“For constructive debate,  it is essential to measure this phenomenon,” he said.

Philippe Marini, president of the UMP’s Finance Committee in the Senate is also on a quest to unearth figures to prove that Hollande is causing the wealthy to run away from home.

He has asked the Finance Ministry for data on the number of departures abroad that are liable for income tax.

But for now, the question of tax exile looks likely to rumble on.

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MONEY

Do you pay tax on cryptocurrency in France and if so, how much?

Cryptocurrency is big business in France but the rules on the taxation of income from the currency differ to other countries.

Do you pay tax on cryptocurrency in France and if so, how much?

Bitcoin. Ethereum. Tether. Mining. Binance. To the uninitiated, cryptocurrency can sound like a different language. But, in France, it’s big business, with an estimated 3.4 million people reportedly holding at least some “crypto”.

In May, France became the first major European nation to give approval for cryptocurrency exchange Binance to operate in the country.

But this does not mean the country is operating a light touch on cryptocurrency regulations – a fact Changpeng Zhao, Binance’s CEO and founder, recognised at an event in Paris in April to launch a government-backed programme for “Web3” start-ups.

As cryptocurrencies become more mainstream, more and more people may be looking to get on board. But, is it taxable? How is it taxable, and how much tax do you have to pay?

First things first: yes, cryptocurrency income is taxed. It’s income. It’s taxable.

The tax rate applicable for capital gains and income from crypto assets depends on whether you’re a professional trader, an occasional investor or a miner.

France’s Direction Générale des Finances Publiques (DGFiP) says that capital gains from the sale of crypto assets like bitcoins are currently taxed at the following rates:

Occasional investors – flat tax rate of 30 percent, made up of 12.8% income tax and 17.2% for social security contributions

Professional traders – BIC tax regime of 0-45 percent.

Crypto Miners – BNC tax regime of 0-45 percent.

The flat rate for occasional investors applies to individuals with financial investments in crypto assets, and other investment income like dividends and life insurance, not to professional traders. 

The DGFiP will only tax capital gains from crypto when crypto is converted into euros or any other fiat currency, if the total capital gain exceeds 305€ per year.

That means those who only dabble in crypto pay less than those who make their living from it.

The difference between an occasional investor and professional trader lies in how often you “dabble”. 

The more you play the crypto market, the more likely you are to be regarded as a professional trader – in which case the variable rate of 0 percent to 45 percent applies.

The point at which an occasional investor and professional trader isn’t obvious – that decision is made on a case-by-case basis – but the DGFiP’s working out on this calculation is based on the total investment amount, trade volumes, and how often you sell cryptocurrency. 

The more often you do this, the more likely you are to be considered a trader.

Mining, meanwhile, falls under the non-commercial profits regime of the general tax code. For more details, click on the government website, here.

As for declaring any crypto accounts you may have, there’s a special section on your annual French income tax declaration. Transfers into legal tender currency (but not another cryptocurrency), as well as purchases of goods or services using crypto, are taxable.

The overall amount of the capital gain (or loss) for the year must be entered in the annual income tax return, along with the details of the transactions

Fines for failure to declare a single bank account or investment scheme are hefty – from €1,500 to €10,000, with €3,000 being a fairly common penalty. These amounts are applied to each account you fail to declare.

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