Some of you might remember that during the French presidential campaign both Sarkozy and Hollande were proposing some sort of expat tax – Sarkozy wanted to tax those who “left for tax reasons”, that ever flexible political catch phrase, whilst Hollande wanted to implement a 75% income tax rate on earnings above 1 million Euros – A sure way to send many wealthy French expats flying towards London and Switzerland.
Anyway, I came across an article about the recent parliamentarian elections that have taken place and about how, for the first time, French expats will be represented by 11 deputies representing overseas constitutencies. Here is an article from the Guardian which has an interesting graphic of how they divided the electoral regions up and how many of the 2 million French expats live in each.
I also came across the following article (article in German, see the google translate link) from the Swiss press today which was talking about Claudine Schmid, a resident of Zürich and now also a French deputy. Switzerland isn’t just under pressure from the US – There are 200,000 French citizens resident in Switzerland, many of whom are now very nervous about what Hollande has in store for them. Will they all be seen as living there for “tax reasons”?
Neither Hollande nor Sarkozy talked about going after normal people, just the “tax dodgers”. The problem here of course is would they differentiate between the two and what is to stop them just tacking a flat tax onto the French nationality itself, as Sarkozy called for? Sarkozy already passed a tax apparently which forces French expats to pay at least 19% in capital gains tax on French investments – The instructions for how this would work have yet to be published but it is on the books.
Pay attention to what happens here, because this could be the “Pandora’s Box” moment for letting taxation based on citizenship out of the box- We just don’t realise it yet. The wildcard here will be whether or not this new expat representation will actually be able to fight such measures. What do you think will happen?