In France people with estates worth above €1.3m ($1.37m) are currently subject to wealth tax at rates varying from 0.5 percent to 1.5 percent of net assets. This generally unfriendly tax environment has been driving assets out of the country.
Interest in tax planning is high among the richest in the country, according to research by GlobalData, a leading data and analytics company. The company’s latest report: ‘Wealth in France: HNW Investors 2017’, confirms that of 22 countries surveyed only wealth managers in Hong Kong record stronger demand for tax advice.
Tax efficiencies are by far the main reason why millionaires resident in France decide to offshore some of their wealth. Many have gone so far as to relocate to Belgium, the UK, and even Russia to reduce their tax bills.
French president Emmanuel Macron’s decision to ease the wealth tax will receive a warm welcome from French millionaires.
A spokesperson from the GlobalData Finance Analysts team, commented, ‘‘In an effort to encourage people (and their wealth) to come home and support the French economy, in 2018 the wealth tax will cover only real estate, rather than the entire estate.’’
But while millionaires’ reaction to such a decision will undoubtedly be positive, it is unlikely to trigger a massive and immediate inflow of currently expatriated wealth. When structuring estates to benefit from perks offered by different jurisdictions, wealth managers execute plans aimed at the long term taking into account more than just tax.