A tax haven is a territory, in some cases a country, where taxation is significantly reduced, i.e. the tax rate is particularly low compared to that set by the OECD (Organisation for economic development). These territories or countries therefore encourage tax evasion on the part of banks, companies or simply wealthy personalities who would like to circumvent the rules. Unfortunately, this process drastically promotes harsh inequalities in the world. But then, what are the favorite tax havens of the French, and what are the risks and dangers associated with this type of approach?
Given the current economic situation, the French are increasingly turning to tax havens. In any case, those who can and have the means to do so. This is called “tax optimization”. This practice has unfortunately become very common and kinds of mutual aid communities have even been created so that the French people concerned can meet to exchange the information necessary to use such practices. In short, it is a question of finding a country of residence which will allow the company or the individual to reduce its tax burden as much as possible. At present, there are many tax havens! Indeed, many countries are setting up campaigns to attract the French to practice tax exile. This is particularly the case of Portugal, Belgium, Switzerland, Mauritius or even Morocco, which are the favorite tax havens of the French. These are countries where taxation would thus be greatly reduced for the French.
Indeed, the French are more and more suffocated by the weight of income tax, wealth tax, or inheritance tax. In some cases, we can sometimes arrive at rates approaching seventy percent tax. Some French people focus on this impossibility for them to have clear economic and fiscal visibility, and are thus convinced that anything can happen. If the government does not take a decision to reduce state spending, the French come to the conclusion that the only possibility for the government will be, as usual, to increase taxes again.
Moreover, due to the fact that it is becoming easier and easier to practice tax exile, this practice is becoming popular and constantly growing. Indeed, a few years ago, some people bordering on a fortune of fifteen million euros still had difficulty in being able to go into tax exile because the application fees would be difficult for lawyers to amortize. Today, a taxpayer can go into exile in Brussels for less than five million euros or in Morocco for less than one million euros, with a monthly income that does not reach five thousand euros.
Belgium and Switzerland have long attracted taxpayers who wish to go into tax exile in order to protect their wealth and continue to do so today. In 2017, there are between two and three thousand families with an average wealth of fifty million euros who would have left France to settle either in Brussels or in Geneva.
French pensioners are very fond of Portugal as a tax haven because the Portuguese government has implemented a measure allowing Portuguese residents receiving a foreign pension to be exempt from tax. The only condition is to certify an annual duration of one hundred and eighty-three days of presence on the territory.
Morocco has, for its part, attracted many French people over the last twenty years by applying this same model. With the low price of real estate, and the tax exemption, the French who go into exile there can afford a standard of living that they would never have reached in France. This country particularly attracts the middle class, which has to tighten its belt in France.
It is only recently that Mauritius has become a popular destination in terms of tax exile. The Island thus offers many tax advantages to companies and is also increasingly seeking to attract French taxpayers. For example, the purchase of real estate thus offers residence permits to foreigners, and there is no wealth tax, no tax on gifts or even on inheritances and capital gains.
On the other hand, French artists are also very attracted to Ireland. Indeed, they would not pay any tax on copyrights or royalties there.
A French person may be tempted to go into fiscal exile from France in order to escape the various taxes. According to statistics, more and more French people practice tax exile. The number of French people abroad has thus tripled in five years. However, it is important to know that this practice involves significant risks because controls are being reinforced and multiplied. The consequences can then be very serious. Indeed, when the tax exile can be proven, with regard to article 4B of the general tax code, then the administration is able to sanction the persons or entities concerned by heavy adjustments accompanied by penalties. According to article 1741 of the general tax code, it can also prosecute them for tax evasion by fictitious domiciliation.
In recent years, with the growth of this practice, there has also been a strengthening of controls, going as far as the tapping of mobile phones. Thus, the Tribunal de grande instance of Paris rendered a decision on January 2, 2017 which perfectly demonstrates the methods used by the tax authorities. In addition, this decision provides information on the tools available to the tax administration in the search for fictitious departures, in particular tapping on the mobile phone but also the peeling of bank accounts in order to demonstrate the numerous expenses made on the French territory, which proves the fictitious nature of exile.