I suspected something like this was brewing. There is a projet de loi here in France that is quite similar to FATCA though it is limited to trusts.
You can read more here. (Article in English)
Here is a choice quotation:
“The new Loi de Finances Rectificative pour 2011 contains measures that oblige trusts and their trustees to report on the trust’s French assets, their French beneficiaries, and/or French settlors.
Reporting is also required even if all the parties to the trust reside outside of France, if the trust holds any form of French asset, such as loans, real estate, stocks and shares.
Also like FATCA, the new law seeks to involve trusts which have French settlors and/or beneficiaries, and/or which contain French assets, in seeing that any tax monies owed are collected.”
If any of you speak French more about the law and the text can be found here and here.
I haven’t had a look at it yet but I think I’ll leave it for tomorrow because I was up really early, it’s now 9 PM here, and I think I need to go “dodo” right about now. 🙂
All of this regulation is going to prove a disaster for the financial industry and the world economies. Just when the world needs more trade and easier cash flows the politicians are doing what they always do, which is to do the exact opposite of what they should do.
Before anyone jumps to the conclusion that this move by France is somehow a vindication of the U.S. FATCA law you should take note that the assets in question of French based assets.
FATCA is a worldwide IRS tax grab on any asset that any American owns and is not restricted to U.S. based assets.
If I am wrong about this please let me know.
I think it depends somewhat on the culture. Brazil has been bureaucratic since the 16th century. The US is now becoming bureaucratic. I think a country like Brazil can live with it because it has always been bad, can can only get better.
America on the other hand is a different story. It can only get worse.
The French system, I don’t know much about.. maybe Victoria can fill us in.
My reading of French history is one of increasing consolidation and bureaucratization from the time of the Old Regime to the modern state. All roads lead to Paris – look at a map and see just how true that is. However there has always been tension between the regions and the centralized government – the provinces did not submit without a fight (and some still fight even today for autonomy, local languages and so)
I would not argue that this law is a “vindication” of FATCA. However going back something I said a few months ago on the Flophouse, “Tax the Diaspora” is a game anybody can play. And the U.S. is quite vulnerable here because it’s a country of immigration and has drawn its citizens from all over the world. You want to extract money from American citizens living in France? Well, OK, but how about we get a piece of the over 500 start-ups in California run by French citizens? Very slippery slope here but quite plausible in my opinion.
If the rest of the world were to adopt America’s taxing policies then immigration will come a halt. America’s expat taxing policy is too burdensome on the expats and it robs the countries in which they live.
Residencey based taxation is the only method of taxation that makes it acceptable for countries to allow in people of other countries. The understanding is that the wealth that they new resident generates will be taxed by the country in which he/she resides because it is that country which provides all of the services and that country which supports establishes the fiscal policies that allows the worker to work and create the excess productivity which the government can then tax.
When a second country, such as the U.S., taxes its non resident citizens the U.S. robs the country of residence of this excess productivity which the worker generated and which the country of residence can tax for purposes of promoting its itnerests. Citizenship based taxation is therefore clearly not a tax on the citizen but a tax on the economy of another nation by way of surrogacy. Citizenship based taxation is therefore is a parasitical and colonial piece of taxation that is carried out by the none resident country.
Yes, the U.S. government is a parasite on the economies of other nations.
I think we may have to agree to disagree on this one.
I don’t think anything can shut down migration. When people want to move, they move regardless of the laws. No country on this planet has been able to stop it and they are all spending enormous amounts of money pretty much to no avail.
What these laws do is create “illegals” – illegal immigrants and, in our case, illegal emigrants.
or as the French say, people in a “situation irrégulière.”
Interesting stat. on French startups in the US. I was friends with a Frenchman in America. I think he’s still there doing well, but not riiicchhh…
I think the US system is almost impossible and extremely expensive to do and be effective (even though the IRS will put out press releases saying that they captured 10 billion in tax revenue. Yeah right! Societies must become much more “digital” without human intervention before they will ever have a very accurate system. So if I were the French version of the IRS, I wouldn’t get too excited about the results.
What worries me, geeeez, above and beyond the questions of data exchange and expat taxes is the possibility – nay, the CERTAINTY – that these systems will have incorrect data. You can have the best IT systems in the world but it’s still “Garbage in. Garbage out.” What mechanism will exist for people to contest what is being reported? People can get in a lot of trouble these days just with the reporting that exists. Ever see the wonderful Ted Talk by Hasan Elahi? He got put on a list and had to jump through a lot of hoops before he got out of it. Video is here: http://thefranco-americanflophouse.blogspot.com/2011/11/ted-talk-hasan-elahi.html
Yep, without explicitly stating so, freedom of speech has been censored as well. After all, I haven’t exactly see the media releasing the defendants’ arguments in these tax cases. I would love to see an article where someone actually points out the fact that they made all of this money in another country, and paid the taxes on it already.
But that can’t happen… because it would make people aware of the problems and open the USGov to a lot of criticism, which is not good for government agendas.