I have updated this today; 6th June, 2016.
It is likely that the French Register of Trusts is not going to
remain a mere information gathering exercise.
The response made by the Tax Administration to the Fédération
Bancaire Française in 2015 will never be published, and
unfortunately, the responses given to the FBF which have been
summarised by Ernst & Young show an awareness that the Register
could be put to an expanded use, now the political, as opposed to
any legal or economic, justification for it has appeared to have
gained ground in France.
It would be naive to think that the Ministère de Finances will
content itself with running such a costly register at a loss. See
prior newsflashes on this point.
The fiscal possibilities pour "la rentabilisation des rentiers
présumés" are manifold, and could range from actually rendering any
change in French property rights subject to a new form of transfer
duty, to extending that to worldwide movable assets as a form of
advanced FATCA. Let us not forget that the French Ministère des
Finances already runs the French land register: the
cadastre.
Given the current issues in France, generated largely by an
inexcusably deliberate ignorance of international structuring of
capital, the use of the Register as a declaration point by
reference by the new French Parquet Financier to determine
perceived "legitimacy" of capital holdings on a transparency basis
needs careful attention.
It is not sufficient simply to fill out the forms in a
sheep-like manner, as there is a difference in the process of being
fiscally shorn, on a regular basis and being permanently fleeced.
The animal perishes in the latter procedure.
Given the stretched ressurces admitted by Mme Houquette,
the"Cheffe du Parquet Financier" in a recent Senatorial hearing on the Parquet's
reaction to the Panama Papers, any French civil servant will
immediately consult the Trusts Register for information on any
individual seeming to have a connection with a trust. If they do
not appear on the Register - without good cause, the issue will
then go "live" on a potentially criminal basis. What is equally
clear is that the issue of trust asets is rapidly becoming of
interest to the rehashed French concepts of "contrat social" into
the idea of a "pacte démocratique" and the recent idealisation of
"moralisation des marchés financiers" headed up by Albéric de
Montgolfier. M. de Montgolfier is an investigative magistrat of
some consequence, who also sat at the same Senatorial Hearing. I
will not go into the issue of idealisation in the context of an
anthropic analysis, but it would seem that the French have
sacrificed their normally pragmatic thought processes on the altar
of collective political unconsciousness.
It is therefore essential to ensure that the position of an
individual is correctly defined and declared on the Register.
Hence the need to ensure that trust arrangements which do not
meet the criteria of article 792-0 bis I be removed from the
Register by a clearly defined and reasoned event declaration n°
2181 Trust1.
For example; French resident trustees might find themselves
subject to an new or increased stamp or transfer duty and income
tax exposure.
It is essential for trustees, "constituants" and beneficiaries
to plan ahead here and get their trusts off the register if
possible, or at least partially.
One method is to ensure that the trust no longer meets the
criteria laid down in article 792-0 bis CGI I. There are others;
but the best move is to concentrate on the legal definiton but
within the international law and and Treaty context to which the
somewhat inadequately drafted deeming mechanisms are subject.
Inaction now could lead to the trust assets being held in a
fiscal and administrative "bearhug" to coin a phrase more usually
found in stock market terminology. There is no point in
behaving like a rabbit caught in the headlights, as there are ways
out of the administrative compliance trap, by turning the deeming
provisions against themselves.
Consult Peter on + 44 1534 625879 or on
peter.harris@overseaschambers.com