France's wealthy flee country due to over taxation

[Bad_Daddy 2,209]

http://homes.yahoo.com/news/is-this-your-chance-to-pick-up-a-chateau-on-the-cheap--190653964.html

By Christina Passariello | The Wall Street Journal.com – Fri, Dec 7, 2012 2:06 PM EST

The French are fleeing. A spate of proposed tax hikes is leading hundreds of wealthy French to consider leaving the country and putting their homes on the market, real-estate agents say. The result: the best opportunity in years for foreigners to buy a Parisian pied-à-terre or country château.

The number of high-end homes on the market has increased, with sales due to expatriations skyrocketing this year to several a week from a few a month, says Charles-Marie Jottras, president of leading luxury brokerage Daniel Féau. Fiscal expats account for more than half of the homes Daniel Féau lists between $6.4 million and $19.2 million, compared with about 10% in prior years.

Several high-profile businessmen have already packed their bags. Former L'Oréal Chief Executive Lindsay Owen-Jones has taken up residence in Lugano, Switzerland. Belgium now counts Amaury de Sèze, who served as chairman of supermarket giant Carrefour, as a local. Nicolas Chanut, founder of French investment advisory firm Exane, moved to London.

Flush French are fleeing the new government's attempts to repair France's public finances by increasing taxes on salaries, capital gains and household wealth. Among the controversial proposals in the 2013 draft budget is a 75% tax rate on salaries higher than $1.3 million, up from less than 50% currently. "Wealthy French are not that masochistic," says Mr. Jottras. The proposed taxes apply only to primary residents of France, however; those who buy a property as a vacation home and spend less than half the year in France will not be affected.

And with the economy keeping prices flat—or in some cases down for the first time in nearly five years—the market is looking particularly attractive for foreign buyers. Prices on luxury apartments and houses have fallen about 6% compared with last year, according to Mr. Jottras.

In an effort to get out quickly, some sellers are slashing prices. A technology entrepreneur's 5,382-square-foot restored Provençal farmhouse on about 15 acres of land is listed at $3.8 million, a 10% discount to the market value, says Philippe Boulet, who heads the St. Tropez and Provence office for Emile Garcin. The 19th-century home and its pool are surrounded by 100-year-old plane trees. The owner—who wants to remain anonymous—is leaving France because of the expected hike in taxes, and is rushing to move to the $2.6 million house he has bought in California, Mr. Boulet says.

The newly available properties of departing expats are scattered around France. A 3,337-square-foot top-floor luxury apartment in Nice boasts an unobstructed view of the Mediterranean for $4.9 million. A roughly 59-acre plot near L'Isle-sur-la-Sorgue, a Provençal town famous for its antique market, includes three separate farmhouses, enough to accommodate multiple generations. It is listed at $4.1 million.

The number of luxury properties for sale could balloon next year, brokers say. That's because France's budget won't be voted on until the end of the year—and many entrepreneurs and executives are waiting on the final tax increases before making the decision to relocate. "There could be a migratory wave in 2013," says Sylvain Boichut, the sales manager for France at luxury brokerage John Taylor.

Some aren't waiting for the new tax laws to pass, blaming their departure on what they call the government's antibusiness mentality. "Entrepreneurs have the impression that the country doesn't appreciate them," says Mr. Boichut. One of his clients with dual French and Italian citizenship is giving up his French passport in disgust, he says.

The media and political backlash against those who leave has prompted wealthy French to be highly discreet. They point to the vilification of luxury-goods tycoon Bernard Arnault, who has requested Belgian citizenship and rents an apartment in Brussels. Libération, a left-leaning paper, put a picture of him on the cover urging him to leave France. Mr. Arnault remains a French taxpayer and has not sold any of his properties, says his spokesman. "Our clients are scared to show off their sports cars in France," says Mr. Boichut.

The vast majority of tax exiles sell their French properties to prove they don't have French residence anymore, according to real-estate agents. Mr. Owen-Jones of L'Oréal, Mr. de Sèze and Mr. Chanut did not respond to requests for comment.

Of course, the French have been moving abroad for decades to escape the country's punishing taxes. But the profile of those leaving is changing. In the past, the typical fiscal expat was a golf-playing retired Frenchman, who packed up after the kids left home and 40 years of paying French taxes, brokers say.

Today, the new expats are younger and still earning their fortunes, a reflection of the government's shift toward targeting high salaries instead of household wealth, as well as the greater ease of moving across Europe's open borders. Still of parenting age, many are selling family-size apartments that have been recently renovated—the kind of property many overseas buyers often seek, brokers say. For example, Nathalie Garcin, who manages the Emile Garcin agencies in Paris, the Atlantic coast and the Alps, listed the homes of a young couple with two children who recently moved to Brussels. One, a 2,691-square-foot, three-bedroom apartment in Paris's George V neighborhood, overlooking the city's rooftops, is listed for $5.4 million. The couple's weekend home, an 18th-century château with a separate guesthouse and guard's quarters, located an hour from the capital, is listed for $3.2 million.

Foreigners now have a new wealth of choice in French property. For more than a decade, buyers from outside France have accounted for most sales over $6.4 million. But the hunt for an apartment in Paris, for instance, can be long because there are so few available.

Now, they are pouncing. Last month, Mr. Boichut sold a multimillion-dollar apartment in the tony eighth arrondissement to a Lebanese buyer, who had waited a year and a half to find his Parisian getaway.

Edited December 11, 2012 by Bad_Daddy

[Brother Hesekiel 2,235]

Cool.

And if other countries follow suit and raise income taxes for the stinkin' rich equally, they have nowhere to go to escape justice.

Little reminder: top US income tax in 1944 and 1945 was 94%. And the US always taxed word-wide income, mind you.

That's when people have a right to whine.

[Mr. Big Dog 10,747]

Cool.

And if other countries follow suit and raise income taxes for the stinkin' rich equally, they have nowhere to go to escape justice.

Little reminder: top US income tax in 1944 and 1945 was 94%. And the US always taxed word-wide income, mind you.

That's when people have a right to whine.

That's really all it takes. Tax worldwide income. Wanna escape the taxes of your country, renounce your citizenship. Because the principle of no taxation w/o representation should always also work the other way around - no representation w/o taxation. Good Luck!