France Suggests EU-Wide Investment Tax Amnesty

by Ulrika Lomas, Tax-News.com, Brussels

18 August 2004

Following the shelving of plans for a national tax amnesty, French Budget Minister Dominique Bussereau suggested in media reports on Monday that France may instead push for an EU-wide tax amnesty.

Speaking to the French daily Les Echos, Bussereau indicated that France and Germany may submit a joint proposal for a tax amnesty on undeclared assets held in foreign accounts, to operate on a pan-EU level.

The idea comes soon after Prime Minister Jean-Pierre Raffarin was forced to drop plans for a national amnesty, as the suggestion was attacked by the left as being immoral, and criticised by business groups for not being radical enough.

"Such a measure will not feature in the 2005 budget," Bussereau confirmed, according to Les Echos. However, he added that:

"But it could be proposed to the European Commission in the coming months, through - for example - a Franco-German initiative. It is in this direction that the Prime Minister asks us to work."

The idea of an EU-wide amnesty is not new, and has previously been mooted by Italy and Belgium. It was discussed by EU finance ministers at the end of 2002 but taken no further by the European Commission.

However, French business groups believe that capital flight from the country will not be reversed until the ISF (Impôt Sur la Fortune) wealth tax is reformed or abolished.

Introduced in the 1980s, the ISF is an annual levy on declared capital of more than €720,000, and is applied on a progressive scale from 0.5% to 1.2%.

The tax is thought responsible for the flight of around €11 billion from France in the last five years, according to a parliamentary report.

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