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TAXES

How ex-minister Cahuzac became a political pariah for tax fraud

Former Budget Minister Jérôme Cahuzac's was jailed for three years on Thursday. Here is a look at how he became a political pariah in France after being charged with tax fraud and kicked out of the government in 2013.

Published: 8 December 2016 11:41 CET
How ex-minister Cahuzac became a political pariah for tax fraud
Photo: Screengrab/TF1

France's disgraced former Budget Minister Jérôme Cahuzac was jailed on Thursday for hiding millions from the French tax man.

When the scandal first first broke in March 2013 the French press and politicians were savage in their condemnation of Cahuzac, who initially lied about having done anything wrong.

President of the Republic, François Hollande, led the charge, denouncing his former ally's four-month campaign of denial and counter-attack as “an inexcusable moral error.”

The then Prime minister Jean-Marc Ayrault was similarly unforgiving, effectively writing Cahuzac's political obituary in the process.

“He must accept all the consequences of his lie, before the French people, and never again exercise political authority,” he told TF1 television.

Among the French commentariat, there has been no-holds-barred condemnation.

“This is total humiliation. With his lies and concealments, Jérôme Cahuzac has done more than just sully his own honour,” wrote a columnist in the left-leaning Libération.

“He has discredited all political speech, and raised doubts as to the authority of the head of state.”

For its part, right-leaning daily Le Figaro also bemoaned the affair's effect on public opinion. “At a time when France goes a little bit deeper into crisis every day, nothing could be more serious than the atmosphere of general suspicion that the Cahuzac affair will inevitably provoke,” wrote one columnist.

In a sign of what was to follow with his later expulsion none of Cahuzac's former colleagues in the Socialist Party were willing to offer any support or consolation.

“I am between rage and consternation,” said deputy Nicolas Bays, taking to Twitter to vent his emotions over the scandal.

Ex-Socialist Industrial Development Minister Arnaud Montebourg found himself equally angry. “My hands are shaking. I have no words,” he was quoted as saying by Le Figaro.

Already on the right, meanwhile, questions were being asked as to the role of President Hollande in the affair.

Jean-François Copé, the ex-leader of the opposition UMP party judged that Hollande had a case to answer as to what exactly he knew.

“Either he knew nothing, which in itself is extremely serious, because it demonstrates a certain naivité, or he did know something, which means he lied to the French people,” Copé was quoted as saying by French daily Le Parisien.

The then Finance Minister Pierre Moscovici denied that the government had tried to “obstruct justice”.

Claude Guéant, the Interior Minister under former President Nicolas Sarkozy, was disgusted by Cahuzac's constant denials of the allegations until he came clean yesterday.

“He openly mocked the President of the Republic and the government,” Guéant told Radio Classique.

“This affair is distressing in terms of the functioning of our democracy, and the trust that our fellow citizens can have in their elected officials,” he added.

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TAXES

Explained: France’s exit tax

Planning on leaving France? You may, depending on your circumstances, be charged the 'exit tax'.

Published: 11 April 2024 11:28 CEST
Explained: France's exit tax

Like some other European countries, France does have an exit tax for those (French or foreign) who are leaving the country. It’s known by the English name l’Exit tax.

However, it won’t affect most people.

Only those who have been tax resident for a minimum six years of the 10 years immediately before they permanently move out of the country are liable to pay an exit tax – if, that is, they own property, titles or rights worth a minimum of €800,000, or that represent 50 percent of a company’s social profits.

If that affects you, the best advice is to seek expert individual financial advice before moving out of France for good. The relevant page on the French government’s impot.gouv.fr website says it is possible to defer payments, and some relief is available.

Because of the relatively high figures involved, this tax is irrelevant for most people. That said, however, you will still have to inform tax authorities that you are moving out of the country because you may still have income, property and capital gains taxes to pay.

Income tax

You must inform the tax office that you are moving and give them your new address so that your tax declarations can be transferred to your new address.

You are liable for tax on everything you earned in France prior to your departure as well as on any French earnings that are taxable in France under international tax treaties that you earned after your departure.

The year of your departure, you declare your previous year’s earnings as normal – declarations in spring 2024 are for earnings in 2023.

A year later, you will have to declare any earnings taxable in France from January 1st up to the date of your departure, and any French-sourced income taxable source until December 31st of the year of your departure.

If you continue to have any French-sourced income – such as from renting out a French property – you will have to declare that income annually, using the non-residents declaration form.

Property taxes

You will have property taxes to pay if you own a French property on January 1st of any given year – whether it is occupied or not. 

Property tax bills come out in the autumn, but they refer to the situation on January 1st of that year, so even if you sell your property you will usually have the pay a final property tax bill the following year.

Moreover, if you receive income from property in France or have rights related to that property (such as shared ownership or stock in property companies), as well as any additional revenue connected to the property, during the year you leave France, you will be required to pay taxes on these earnings.

If any property assets in France exceed €1.3 million on January 1st of a given year, you may also have to pay the wealth tax (IFI).

READ ALSO What is France’s wealth tax and who pays it?

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Capital gains tax 

If you sell your French property or share of a French property, you may be liable for capital gains tax at a rate of 19 percent. It will also be subject to social security contributions at the overall rate of 17.2 percent.

Capital gains tax varies depending on how long you have owned the property and whether it was a second home or your main residence.

READ ALSO How much capital gains tax will I have to pay if I sell my French property?

The good news is, if you move to another EU country, or any country that has a specific tax agreement with France, you may be exempt from capital gains tax for non-resident sellers on the sale of a property that was your principal residence in France.

If you move elsewhere, you may be able to claim exemption on capital gains tax up to €150,000. As always, you should seek expert financial advice.

Tell Social Security

Inform social security that you are leaving France permanently – and return your carte vitale if you have one. If you do not, you may be liable for any benefits you receive to which you are no longer entitled.

More mundane tasks involve informing utility and water companies, your internet provider, if you have one, the phone company, your insurance companies, banks – and La Poste, who will be able to forward your mail for up to 12 months, for a fee…

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