Some pension industry experts say that this is in spite of the fact that much confusion remains as to how the new law affects personal pensions, including QROPS.
Trustees of trusts with French connections have until the 15th of June to make their annual disclosure of the market value of the assets, rights or capitalised income. This reporting obligation applies to trusts in existence on 1 Jan 2013.
Because 15 June this year falls on a Saturday, the deadline has been moved back to 17 June, according to Caroline Cohen, of the French Law Practice, in London.
Likewise, the deadline in situations in which the settlor or the deemed settlor is a non-French tax resident, the deadline this year is 2 September rather than 31 August, which is also a Saturday, Cohen noted.
As reported, the Loi de Finances Rectificative pour 2011, which took effect on 31 July 2011, introduces a range of measures that oblige trusts and their trustees to report on the trust’s French assets, their French beneficiaries, and/or any French settlors. It has been described as a French “mini-FATCA for trusts”, because it aims to collect information for the purposes of ensuring the payment of taxes.
Non-French financial services executives have said they are struggling with the law, which some say may reflect a French aversion to trusts, which are considered an Anglo-Saxon law concept.
Roger Berry, managing director of Guernsey’s Concept Group, a QROPS and pensions provider, said that the new law has resulted in “enormous confusion” for companies like his. And even though “people are writing to the French authorities for clarification, little if anything is coming back”, he added.
“It would be reasonable to assume that the French never fully considered pension issues from anything other than their point of view, ie, that they are company-sponsored arrangements,” he said.
“Personal pension arrangements are not exempted, so any personal pension, whether it’s a UK-registered pension scheme, a QROPS or QNUPS, appears to fall into the reporting” category, “unless you can show that the pension is an employer-sponsored scheme, and [the beneficiary is] a bona fide employee”.
What is more, Berry went on, it is still not clear what happens “where a bona fide employer scheme is transferred into a personal pension scheme – does the fact that the original source is employer-sponsored funds achieve the exemption rights or not?
“Many questions and not many answers.”
According to Cohen, trusts must report to the French tax authorities when one or more of three conditions is met: if the settlor (or deemed settlor) is French-tax resident; if a beneficiary is French-tax resident; or if one of the trust’s assets is located in France, apart from financial investments.
The authorities have issued a specific document for use in reporting on trust assets – 2181 Trust 2 – but trustees may also report the necessary information “by a simple letter”, Cohen said.
The introduction of the Loi de Finances Rectificative is part of an increasingly less tolerant approach undeclared wealth in France over the last few years.
The top rate of income tax has been raised – notwithstanding a much-publicised protest by French actor Gérard Depardieu, who said he was giving up his passport and moving to Belgium – and as of 5pm yesterday, for the first time ever, French MPs were required to reveal their wealth and assets. This requirement came in the wake of the resignation of France’s budget minister, Jérôme Cahuzac, whose job it was to crack down on tax evaders, but who was found to have money hidden in a Swiss bank account.
