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“Trench Warfare” And “Civil War” Over Confiscatory Taxes In France

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Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

“We’re engaging in trench warfare,” proclaimed Alain Afflelou, head honcho and founder of an eyewear company with 1,200 stores in France and other countries. One of the wealthiest men in France. He was talking about the tax fiasco that split France in two. He was done with his country. He’s moving to London. One of France’s so-called fiscal exiles.

He’d set up his international headquarters in Switzerland, rather than France, 15 years ago to minimize his company’s tax burden, but now he’d personally bail out.

The clamor had started in September when it leaked out that Bernard Arnault, richest man in France and CEO of luxury-goods empires LVMH and Groupe Arnault, was applying for Belgian citizenship. In response, Economy Minister Pierre Moscovici threatened to renegotiate the tax treaties with Belgium, Luxembourg, and Switzerland. A few days ago, reports surfaced in the Belgian media that mailbox companies—a dozen at the Brussels apartment of a Groupe Arnault director alone—have allowed Arnault’s empire to escape several hundred million euros in taxes.

Belgium got cold feet. On Saturday before Christmas when nothing was supposed to happen, Anti-Fraud Secretary of State John Crombez requested that Finance Minister Steven Vanackere transfer Arnault’s tax file to the tax authorities in France, an idea the minister did not immediately reject.

Now Arnault got cold feet. LVMH and Groupe Arnault defended themselves the best they could, claiming that these mailbox companies had “economically perfectly real activities in Belgium where some of them have been implanted for decades.” Indeed, they were “surprised” by the allegations.

But no one stirred up the heat in France like iconic actor Gérard Depardieu who, turns out, set up his domicile in Néchin, a village just across the border in Belgium—as the mayor confirmed, “to escape French taxation.”

Final straw for President Hollande. Now he too threatened to renegotiate the tax treaty “to deal with cases of those who settle in some Belgian village.” He lashed out against the “fiscal dumping” that some countries in the EU were practicing. Prime Minister Jean-Marc Ayrault chimed in; Depardieu’s exile was “pretty pathetic.”

Depardieu was not amused. In an open letter, he renounced his French citizenship, broadsided the Prime Minister and the President, and shocked the nation: all taxes combined ate up 85% of his income.

Not true, explained eyewear mega-retailer Alain Afflelou during the interview. “Those who are in the 75% income-tax bracket may go well beyond 90% taxation.” He listed layers of additional taxes, small percentages here and there that added up. “We therefore have in France a confiscatory taxation that can deprive us of all of our income from work.”

Then he uttered “trench warfare” to describe the battle between the two sides. “We have to stop saying that CEOs are thieves, thugs, and dishonest people. We need people who work, who make a living, who create jobs.”

He was echoing Laurence Parisot, President of the MEDEF, France’s largest employer union. “Doubt is taking over the life force of the country,” she complained; Hollande in his confrontation with Depardieu was doing “the opposite of what he promised,” namely to pacify the country and reduce antagonism. “We are in the process of creating a climate of civil war, similar to 1789,” she said.

Hollande jumped on the airwaves and tried to impose some sort of armistice. The 75% tax bracket would be temporary, he said. And concerning Depardieu: “No citizen must be stigmatized by the President.” But by using that word, he stigmatized him—and all the others who’re trying to escape.

There are a lot of them. Le Figaro cited tax lawyers who spoke of “unprecedented waves” of fiscal exiles who were leaving France, some of them in the middle of the school year, which “had never happened before.” Moving companies confirmed it. Outflows “remain two to three times higher than normal,” said the boss of one of them. “Our trucks leave constantly in direction of Switzerland, Belgium, and Great Britain.”

And the profile of the fiscal exiles has changed. They’re no longer rich heirs or fifty-year-olds who’d sold their companies, but “young childless entrepreneurs” who wanted “to settle in another country to start up their companies,” according to one of the tax lawyers. And top executives between 40 and 55 were moving with their kids to Brussels or London “to escape” the new taxes.

Entire skill sets were leaving. International companies were “progressively relocating part of their teams abroad,” said le Figaro’s source within the MEDEF. Among them more and more secondary functions, such as human resources or finance—”much less visible and symbolic than relocating headquarters.”

With heavy consequences for the economy. When talent, entrepreneurial energy, capital, and profits leave the country all at the same time, it’s hard to imagine how economic growth and job creation could miraculously reappear.

Also on Friday before Christmas when nobody was supposed to pay attention, the European Commission issued a mind-boggling report on bank bailouts in the EU: Member States had committed over $2 trillion at the expense of current and future taxpayers to bail out stockholders, bondholders, and speculators. Read.... The EU Bailout Oligarchy Issues A Report About Itself.

 

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Mon, 12/24/2012 - 14:53 | 3093429 americanspirit
americanspirit's picture

It's not just France that is driving away those who can see what is coming. I have friends in Spain and Portugal who have already left and others who are getting it together to leave ASAP.

The problem will come when those who can't flee France realize how stuck they are. I wouldn't be at all surprised to see Paris burning within a fairly short time. The revolutionaries in the streets this time will be Africans and Arabs, and the symbols of this revolution will be machetes and molotov cocktails. Chop chop, burn burn.

Mon, 12/24/2012 - 14:02 | 3093279 MrSteve
MrSteve's picture

I note that numerous Jewish families who were fleeing from the Nazis and who deposited their treasures in Swiss banks later found they could not recover their misappropriated funds. Apparently not all Swiss bankers are strictly, morally legit. They have loopholes too. Good luck!

Mon, 12/24/2012 - 14:26 | 3093343 etresoi
etresoi's picture

What fool would entrust their assets to any bank?

Mon, 12/24/2012 - 11:21 | 3092808 OpenEyes
OpenEyes's picture

Good article Wolf, Thanks!

 

Mon, 12/24/2012 - 11:18 | 3092796 smacker
smacker's picture

France needs a 6th Republic that understands, and is committed to, freemarket enterprise. But since socialism & state-capitalism - is so deeply entrenched with so many corrupt beneficiaries, it will take another revolution to achieve it.

Time to sharpen the guillotines...

With some luck, the implosion of France will herald the downfall of M Hollande and might provide a salutary lesson to the rest of the big-state morons in the EU and Brussels.

Mon, 12/24/2012 - 11:24 | 3092813 AnAnonymous
AnAnonymous's picture

Rise up, rise up, infinite growth, rise up and help 'americans' out.

Tough days for scum, huh? 'Americans' residing in France are well 'americans'

And it is quite hard to bamboozle 'americans' about the virtues of 'americanism'

But hey, 'american' economics is all about consumption so if propagating that 'americans' have the keys to infinite growth helps the consumption, why not?

Consumption is an 'american' duty.

Mon, 12/24/2012 - 13:41 | 3093227 TheFourthStooge-ing
TheFourthStooge-ing's picture

Tough days for scum, huh? Chinese citizenism citizens residing in France are well 'AnAnonymicans'

And it is quite hard to bamboozle AnAnonymous about the virtues of Chinese citizenism.

But hey, Chinese citizenism world order economic system is like a digestive apparatus with inputs and outputs. Outputs are not wealth and are deposited on roadsides in piles bigger than pingos.

Roadside excretion is a Chinese citizenism citizen doody.

Mon, 12/24/2012 - 13:36 | 3093221 adventuretime
adventuretime's picture

when is zh getting an ignore function?

Mon, 12/24/2012 - 13:27 | 3093194 smacker
smacker's picture

You downplay that American people have brought a great number of good things to the world we live in, including the motor car and commercial personal computers. It is not the American people who have trashed their economy, but their political elites and a tiny number of criminal banksters who are perverting the great nation established by its founding fathers.

Mon, 12/24/2012 - 13:57 | 3093269 AnAnonymous
AnAnonymous's picture

including the motor car and commercial personal computers.
______________

Actually, all these inventions were brought by people in Europe from times their 'american'-ness can be doubted.

Lets state they were 'americans' though for the sake of it.

They are dead by now and calling them 'american' if they were not wont harm them.

Mon, 12/24/2012 - 15:17 | 3093497 smacker
smacker's picture

Well, you know, I could have sworn that it was Henry Ford who brought motor cars to the people. This from Wiki: "Although Ford did not invent the automobile, he developed and manufactured the first automobile that many middle class Americans could afford to buy."

Ditto, the Personal Computer...although IBM did not invent computers nor the Sinclair and several others, it most certainly did bring personal computing to the people, and this has changed the world we all know. How do I know this? Well, don't ask.

Merry Xmas

Mon, 12/24/2012 - 10:53 | 3092731 lakecity55
lakecity55's picture

I call for  a ZH colony in Alaska.

I can pull guard duty and service the IT stuff.

Mon, 12/24/2012 - 12:39 | 3093037 globozart
globozart's picture

do it in Hawaii and I join, providing European cuisine...

Mon, 12/24/2012 - 11:27 | 3092822 AnAnonymous
AnAnonymous's picture

Call for an 'american' colony in a place devoid of any resources.

What a brilliant example of 'americans' overcoming an unfriendly to life environment.

Besides, this kind of environment is probably the one kind of environment the other 'americans' wont dispute.

So go, go, go. Lead by the example, show the 'american' worth.

Side note: as a mandatory means to spread the resourceful 'american' spirit in action, do not forget to take with you a cam cord, a satellite linker and stuff like that so that the whole story of the 'american' pionneering spirit can shine on the social media you'll upload your videos to.

Cant wait for the good stuff, will sit comfortably to watch it. Gonna be a good show.

Mon, 12/24/2012 - 13:33 | 3093212 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

Cant wait for the good stuff, will sit comfortably to watch it. Gonna be a good show.

Nothing can be matching the good show of video AnAnonymous paying visit to the Hongkong:

http://www.liveleak.com/view?i=2c9_1328304616

Eternal nature of Chinese citizenism in full display judiciously.

Mon, 12/24/2012 - 13:48 | 3093246 AnAnonymous
AnAnonymous's picture

More fantasy. Another 'american' who is going to wait for Santa Klaus, teach children to wait for Santa Klaus

The 'american' love story for fantasy...

Mon, 12/24/2012 - 14:24 | 3093334 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

Another 'american' who is going to wait for Santa Klaus, teach children to wait for Santa Klaus

How long were you standing there after the video ended before you wiped your ass with your bare dung hand?

Mon, 12/24/2012 - 14:30 | 3093353 AnAnonymous
AnAnonymous's picture

Considering the 'american' taste for fantasy, well, it might take a long, long time.

'Americans' fancying on a imagined situation in order to flee from the reality of 'americanism', making things up to keep dreaming the dreams of fantasy... That stuff can last long, very long.

Yep, very, very long.

In the meantime, the 'american' world will go round.

So who cares?

Mon, 12/24/2012 - 15:09 | 3093476 TheFourthStooge-ing
TheFourthStooge-ing's picture

Classic AnAnonymous diversionariness. He knows the video has exposed his insanitation, so he distracts by arguing with himselfs. His utterings are like two flamingos in a fruit fight.

Mon, 12/24/2012 - 10:16 | 3092639 hairball48
hairball48's picture

I've said this before. Who cares about the frogs anyway?  Rude people and the hookers smell bad.

Mon, 12/24/2012 - 09:47 | 3092590 overmedicatedun...
overmedicatedundersexed's picture

 TD..in years past ZH pointed out crimes in finance, to date, the Jon corzines of the world remain safe and free..many posted back then  that if DOJ did not act it would lead to private citizens taking action. It has not..I wonder why? A new thread on the inaction of honest men in the face of obvious crime may provide us some reasons..mine is the frog is slowly cooked and temps are kept within normal limits to avoid hasty frog reactions.

Merry christmas and happy New Year TO ALL, stupid to say in these times of loss of freedom, but out of habit there it is. 

Mon, 12/24/2012 - 09:28 | 3092567 Ignorance is bliss
Ignorance is bliss's picture

France is in crises because they gave up the power of creating their own fiat. To lose the power over sovereign debt creation and distribution is to lose the ability to govern and control the sheeple effectively. France will eventually leave the Euro as will Spain, Portugal, Greece, etc.

The French Gov't needs to control the flow and distribution of fiat within their borders. To lose monetary sovereignship also means losing sovereign power over the largest companies, and Gov't agencies within the country.

We are seeing a power struggle play out within France. The French Gov't is learning just how much power she gave to the European Union. The French Gov't has become a vassal state to the greater Eurocratic Gov't. They went willingly into bondage. The rest of us were born as slaves into the current monetary matrix.

 

 

Mon, 12/24/2012 - 11:29 | 3092827 AnAnonymous
AnAnonymous's picture

But, but, some of them moved to Belgium, which is in the EMU.

So, so what?

Mon, 12/24/2012 - 12:27 | 3093008 Ignorance is bliss
Ignorance is bliss's picture

So they escape French taxation. By proxy the French Gov't loses monetary and financial power over her productive citizens.  The stuff they use to keep the sheeple asleep. Gov't are all about power, control, and taking your stuff to maintain the power and control of the sheeple. France is experiencing a resource drain. She can't print money to alleviate the drain. and is losing power over all as a result.

Mon, 12/24/2012 - 13:26 | 3093191 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous avoids French taxation due to parasitical eternal nature of Chinese citizenism as blobbed up into France.

French taxes AnAnonymous evading much the adroitly. French dogs evading his wok not demonstrating similar technique nimbly...

Mon, 12/24/2012 - 13:50 | 3093253 AnAnonymous
AnAnonymous's picture

Dogs have nationality now.

With 'americans', the group is all.

Too funny, same question hanging: why do 'americans' spend so much on their comedy movies when they have that demented natural sense of humour?

They should simply listen to themselves speaking to have good laughters for cheap...

Mon, 12/24/2012 - 14:19 | 3093321 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

Dogs have nationality now.

Dogs living in France are French dogs. The insanitation of your eternal nature would tell that they are 'american' dogs.

With 'americans', the group is all.

With AnAnonymous, the group is all, as long as the group is 'americans' and distracts from the duplicitous eternal blobbing up nature of Chinese citizenism.

They should simply listen to themselves speaking to have good laughters for cheap...

Best, laughterings at Chinese citizenism citizens blobbed up into France who consider themselves experts in French cuisine because they wok a stray Parisian hound.

Mon, 12/24/2012 - 14:34 | 3093362 AnAnonymous
AnAnonymous's picture

Dogs living in France are French dogs.
________________________

It always take an 'american' to outdo an 'american'

Dogs living in France are French dogs.

Best.

The australian terrier is french when living in France?

For 'americans', the group is all.

My, my, my...

Mon, 12/24/2012 - 15:05 | 3093460 TheFourthStooge-ing
TheFourthStooge-ing's picture

Typical AnAnonymous tactic of evasion the subjectings, dropping of non sequiturds, and runnings fastly away.

Spitball scalped the baby, my, my, my...

Mon, 12/24/2012 - 08:49 | 3092530 Cultural Capital
Cultural Capital's picture

We will finally be able to judge how uni-polar this world really is by the amount of non-FATCA compliant counties/companies there are in a few years time. All the real soldiers know.  

Mon, 12/24/2012 - 08:10 | 3092502 egoist
egoist's picture

All of the historical (and this contemporary) evidence of the ruinous theft of Peter for Paul, but we (in the US) march on to replicate it. A dominate constant throughout the ages: evasion.

Mon, 12/24/2012 - 07:38 | 3092490 falak pema
falak pema's picture

hahaha, Alain Affelou....hahaha, Bernard Arnault, can you imagine these Oligarchs in the trenches? 

What a misonomer! An Oligarch sips champagne while others die in the trenches. 

Wolf... and crying wolf, mixing metaphors. 

Nope, its time Eurozone established some tax harmonisation and put into practice what it has preached of shutting down this off shored casino where 25 trillion of private wealth sucked out by Oligarchs, like Papa androu and his 500 million, and all the others in Caymanista land, as the Corporates and their transfer pricing, as the whole shadow banking shooting match and ZH/SPV fronts registered in "never pay any taxes land", get called into the Oligarchy vs State debate. FOR REAL. 

Why should the ongoing first world civilisation meme stay : We privatise profits in Caymans while we socialise debts is nation states; all in the name of good ole Neoliberalism of Reagan-Thatcher days; now viral cancer, that's a GIVEN.

WHat sort of logic is that? 

 

Mon, 12/24/2012 - 08:50 | 3092520 Bob
Bob's picture

“Those who are in the 75% income-tax bracket may go well beyond 90% taxation.” He listed layers of additional taxes, small percentages here and there that added up. “We therefore have in France a confiscatory taxation that can deprive us of all of our income from work.”

ALL of our income, supposedly.  From "work," no less.  Who can take this shit seriously?  Especially from the class that has enjoyed the vast majority of the gains in labor productivity over the last 30 years, yet has never stopped pleading poverty and financial repression?  Reminds me of the crazy bastard billionaire who ran the tearfully moving tv commercials against socialism here during the election season.  It was the Wall Street equivalent of the commercials we used to see in the 60's where the Native American chief mourned the destruction of our lakes and rivers (which were then actually catching fire.)

I can understand their emmigration.  More bullshit cons directed at the financially illiterate just ain't gonna fly.  Louis XVI should have had the sense to go while the getting was good.  The question is just how long they can run.

Mon, 12/24/2012 - 11:32 | 3092835 AnAnonymous
AnAnonymous's picture

It was the Wall Street equivalent of the commercials we used to see in the 60's where the Native American chief mourned the destruction of our lakes and rivers (which were then actually catching fire.)
_________________

Big signal it was about time to outsource the production that caused all that pollution.

'Americans' can thank all the countries that welcome the 'american' boon so that 'americans' can live and enjoy their standard of life they could no longer afford while maintaining life jeopardizing activities at home.

Welcome to an 'american' world, it is a cosy place, you'll see.

Mon, 12/24/2012 - 13:15 | 3093154 TheFourthStooge-ing
TheFourthStooge-ing's picture

Big signal in Chinese citizenism it was about time for blobbing up Chinese citizenism citizens into other countries to escape the pollutingness inherent to Chinese Citizenism Communautist Party industrificalization policy dangdang.

'AnAnonymicans' can thank all the countries that did welcoming the Chinese citizenism boon so that Chineses citizenism citizens can blob up and enjoy their standard of life they would no longer endure while maintaining life jeopardizing activities at home.

Welcome to a Chinese citizenism citizen blobbed up world, it is a smelly place, especially the roadsides, you'll see.

Mon, 12/24/2012 - 11:26 | 3092816 masterinchancery
masterinchancery's picture

Another French surrender monkey.

Mon, 12/24/2012 - 07:25 | 3092484 lolmao500
lolmao500's picture

France is done.

They have been going down for decades but this might be what breaks the camel's back. Finally the socialists will understand how socialism is crap.

Mon, 12/24/2012 - 04:16 | 3092433 Joe A
Joe A's picture

Apparently, France is a tax heaven for multinationals, according to the testosteronepit.

Mon, 12/24/2012 - 07:39 | 3092491 falak pema
falak pema's picture

SPOT ON.

Mon, 12/24/2012 - 03:57 | 3092425 etresoi
etresoi's picture

In defense of France, it is paradise, if you have no money.  If you have money, Switzerland is paradise.

Each of us has an obligation to ourselves to look at the world objectively and plan accordingly.  I read ZH and find in the comments all manner of screaming, shouting and complaining about one government's or an other's fiscal or monetary policies but how many of you are planning ahead and acting on your plans to protect yourselves from whatever government.

I left the USA the day after Bush ll was confirmed to have won the election.  Plans had been in place for years.  There was no exit tax, because of long term planning, when I renounced citizenship and became Swiss.  I chose to reside in France, because the French people are more anarchistic despite the socialist leanings of the government.

France is going to blow, not because of the income tax but because the government needs funds to bail out the banks and is placing the burden on the taxpayer. ( sound familiar?)  I keep only daily funding in France and always keep one car with a full tank of gas, so that I can make an exit to Switzerland.  No, this is not in reaction to current affairs but the exit plan has been in place for ten years, which is why I have already obtained legal residency in an Asian country.

European governments come and go.  The USgov is collapsing, or worse.  They are not looking out for you!  Protect yourself.

Mon, 12/24/2012 - 11:27 | 3092821 masterinchancery
masterinchancery's picture

In France, the govt is 55% of the economy.  Not "sustainable", as the eco-freaks would say.

Mon, 12/24/2012 - 14:34 | 3093363 etresoi
etresoi's picture

... and the USgov is what percent of the GDP?

Mon, 12/24/2012 - 11:34 | 3092841 AnAnonymous
AnAnonymous's picture

Yep, the 'american' dichotomy between public and private...

Bad news, 'american' consumption, be it private and/or public, they arent sustainable.

The 'american' way of life, so to say.

Mon, 12/24/2012 - 12:46 | 3093058 sun tzu
sun tzu's picture

Espocially when those in "poverty" have smartphones, cable TV, eat steaks and lobsters, have $5,000 rims, and everything provided to them for free, the society is decadent.

Mon, 12/24/2012 - 13:53 | 3093261 AnAnonymous
AnAnonymous's picture

Especially when this distribution of goodies helps the 'american' middle class to have a triple number of smartphone, cable tv, steak and lobsters...

There is no decadence in an 'american' society.

'Americans' run an extortion of the weak, farming of the poor scheme.

Charity is just a business aiming at fattening the 'american' middle class. Never been done for the sake of the poor.

Welcome to an 'american' world.

Mon, 12/24/2012 - 10:44 | 3092704 lakecity55
lakecity55's picture

There is no place to run!

Welcome to Thunderdome!

Mon, 12/24/2012 - 11:28 | 3092826 masterinchancery
masterinchancery's picture

Break a deal, face the wheel!

Mon, 12/24/2012 - 09:18 | 3092552 falak pema
falak pema's picture

you sound like a midsummer night's dream that stays rich like wild strawberries growing in sound of music country. I hope you  find asian cream to go with it when France screams : I've had it. 

Marco Polo would be proud of you. Maybe Oulan Batur is a nice place to go. They make good yoghurt. To go with the strawberries. Never forget in straw berries there is straw and there is merry berry-berry.

Separated its poison so keep it together like gold n silver. Exit plans and cars full ot gas, what a nomadic existence is now the name of the "run from hell" game. 

First world blues as the unemployment rates in Spain hit the sky. 

Hollande will have to cut government spending to meet the Oligarchy's standards; and he will, like Greece and Spain have done. 

Mon, 12/24/2012 - 14:35 | 3093158 etresoi
etresoi's picture

Falak, usually your comments are well thought and presented.  Today, it seems that you have hit the holiday spirits, early.

Mon, 12/24/2012 - 07:36 | 3092488 negative rates
negative rates's picture

It's a small world my friend, you can run, but you can not hide. Within 4 years, you will be caught with your shorts down and wallet empty. Trust me.

Do NOT follow this link or you will be banned from the site!