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French Assembly Adopts Collective Budget Bill

Friday, June 17, 2011

The French National Assembly has voted in favour of the government’s supplementary 2011 finance bill, providing for a reduction in the taxation of wealth (l’impôt de solidarité sur la fortune – ISF) and for the abolition of the highly controversial and increasingly untenable tax shield mechanism (le bouclier fiscal). The bill was adopted by 310 votes to 220.

The government explains in its release that the text provides for wealth tax reform by simplifying the system and by adapting it to economic realities. From 2012, the ISF tax on wealth will comprise of only two tax brackets: a 0.25% tax rate imposed on individuals with net taxable wealth in excess of EUR1.3m and a 0.5% tax rate levied on individuals with net taxable assets above EUR3m.

To alleviate any threshold effects, a discount mechanism is to be instated applicable to wealth of between EUR1.3m and EUR1.4m, as well as to wealth of between EUR3m and EUR3.2m, the government notes. Under the proposals, tax declarations are to be simplified for the majority of taxpayers from 2012.

According to the government, the reform is to be financed by a greater taxation of donations and very large inheritances and by the introduction of a tax imposed on the secondary residences of non-residents, by way of a contribution to national public services from which they benefit.

Under the plans, measures designed to combat international tax evasion are also to be introduced, notably the taxation of trusts and the creation of an “exit tax” on capital gains derived from the sale of significant participations for taxpayers who elect to transfer their fiscal residence abroad.

In accordance with the provisions contained in the bill, the tax shield mechanism, limiting direct taxes in France to 50% of income, which was introduced in France in 2005 and subsequently strengthened in 2007, is to be abolished

Defending the measures contained in the bill, the government emphasized back in May that the aim of the reform is to ensure that the taxation of wealth is fairer, simpler and more economically pertinent. Indeed, the government highlighted at the time that the existing solidarity tax on wealth, which is often considered a French anomaly, merely serves to lessen the attractiveness of France.

Determined to assure the electorate that the reform does not merely constitute a gift to France’s wealthiest, the government has also recently made known its intention to examine the idea of introducing a specific tax on top earners and on banking bonuses, which could be included in the country’s forthcoming 2012 finance bill in the autumn.

The 2011 supplementary finance bill is due to be examined by the Senate from June 21.

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Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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