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France passes law to clean up politics after string of ‘fake job’ scandals

France's parliament overwhelmingly backed a new law Wednesday to clean up politics, a campaign promise of President Emmanuel Macron following a string of scandals.

Published: 10 August 2017 09:08 CEST
France passes law to clean up politics after string of 'fake job' scandals
A fake jobs scandal torpedoed the presidential bid of conservative candidate Francois Fillon. AFP
A total of 412 lawmakers backed the bill, which will notably scrap cash handouts for lawmakers to spend on areas and NGOs of their choice.
   
Parliament had last week already voted through aspects of the law banning MPs and ministers from employing their family members, as Macron's new centrist government seeks to restore public trust in politicians.
   
“Practices… that were probably tolerated, maybe accepted for some time, are no longer accepted today,” Prime Minister Edouard Philippe told French radio.
   
The presidential campaign that saw Macron take power in May, becoming France's youngest-ever president, was rocked by allegations that his rightwing rival Francois Fillon employed his wife as a publicly-funded assistant for years despite little evidence of any work.
   
Fillon was the odds-on favourite in the race until revelations at the end of January that he had employed his Welsh-born wife Penelope.
   
READ ALSO:

Macron backpedals on creating official 'first lady' status for his wifeMacron has reconsidered plans to give his wife an official status. AFP

But his poll standings plunged as he struggled to convince voters that his wife and their children had worked to justify their pre-tax income of around 900,000 euros ($1 million) over 15 years.
   
The Republicans party nominee was charged with misusing public money in March, just weeks before crashing out of the first round of the presidential election. He denies any wrongdoing.
 
Plummeting approval rating
 
The passage of the ethics bill will be a welcome achievement for 39-year-old Macron, who has seen his approval ratings plummet after less than three months in office.
 
One survey published last week showed just 36 percent of respondents held a positive view of the former economy minister and investment banker, who shot to power promising to overcome France's entrenched right-left divide.
   
He has since come under fire for his labour reform programme, budget and public spending cuts as well as a plan to create an official First Lady position for his 64-year-old wife Brigitte.
 
Proposed defence cuts — part of a plan to trim 4.5 billion euros ($5.3 billion) to bring France's budget deficit within EU limits — led to a public spat last month with the head of the French armed forces, General Pierre de Villiers.
   
Macron rebuked the general after he had complained about the impact of cuts at a time the army was in action in the Middle East and West Africa as well as at home. De Villiers resigned a few days later.
   
The young president faces more turbulence in September, with some union leaders calling for demonstrations against labour reforms at the centre of Macron's election manifesto.
   
Parliament last week adopted a bill allowing the government to fast-track changes to the labour code to give employers more power to negotiate working conditions directly with workers.
   
The hardline CGT union has called for countrywide strikes and protests on September 12.
 
U-turn over First Lady
 
Macron has reconsidered plans to give his wife an official status, which he had promised on the campaign trail, backing down in the face of attacks from the left and a petition against the move.
   
Critics saw a double standard in Macron pursuing the plan while pushing through legislation to stop deputies hiring their own relatives.
   
A “fake jobs” scandal struck close to home in June, when Macron's justice minister, Francois Bayrou, stepped aside to fight allegations that his small MoDem party misused European Parliament funds.
   
Bayrou had been tasked with crafting the ethics law — measures he himself advocated.
   
Two other MoDem cabinet members  — then defence minister Sylvie Goulard and European affairs minister Marielle de Sarnez — also quit over the accusations that MoDem had misused the European Parliament funds to pay assistants actually based in France.
   
The same practice has embroiled several other MEPs, the most high-profile case involving far-right leader Marine Le Pen, Macron's rival for the presidency.
   
Under the new law, hiring a spouse, partner, parents or children will be punishable by three years in prison and a fine of 45,000 euros ($53,000), with in some cases an order to refund the sums paid out.
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PROPERTY

French property: What is buying ‘en tontine’?

If you're buying property in France, you might be thinking about buying 'en tontine' - this has advantages especially when it comes to France's strict inheritance laws, but can also have tax implications.

Published: 25 March 2024 11:17 CET
French property: What is buying 'en tontine'?

What is it?

The ‘clause de tontine’ sometimes also known as a ‘clause d’accroissement’ is a clause that is inserted into the property deeds when you are buying a house or apartment.

It can only be inserted during the purchase, and cannot be added later.

It’s basically a ‘group purchase’. It’s most commonly used by unmarried couples who are buying together but it can be used by larger groups too – for example a group of friends buying a holiday home together.

You will have to ask a notaire to draw up the tontine clause during the property purchase and it can only be used if 

  • the parties are equally involved in the financing of the purchase
  • the parties involved have a roughly equal life expectancy (for this reason tontine clauses may be rejected if there is a significant difference in age between the purchasers)

What’s the point of it?

The main reason that people use it is to sidestep France’s strict inheritance laws, which assign that a certain portion of every estate must go to children, at the expense of a partner. 

READ ALSO How France’s strict inheritance laws work

For this reason it is particularly used by couples who have children from previous relationships.

On a property with a tontine clause in effect, when one owner dies their share of the property passes in its entirely to the other member/members of the tontine.

This cuts out children from inheritance, but means that a surviving partner is not evicted from their home in favour of the children of the deceased. 

It also has the advantage of making the intentions of the deceased clear, to avoid arguments among heirs after their death.

It should be noted, however, that the tontine clause only takes in the property that it covers – other assets may be subject to French inheritance law so it’s therefore probably wise to arrange a will, to ensure your wishes for your estate are met.

The surviving party can ask a notaire to update the property deeds to show that they are the sole owner, if they want. Be aware there will be a fee, which could reach four figures for the privilege – and it doesn’t actually involve any change to the property title.

Drawbacks

The advantages of the system are clear, especially for blended families, but there are some potential drawbacks too, which mean that anyone considering buying in this way would be well advised to take proper legal advice before they start.

Inheritance tax – while a tontine will help you to avoid restrictions on inheritance, it does not exempt you from inheritance tax. French inheritance tax is structured according to your relationship to the deceased, and people who are neither married nor related to the deceased pay an eye-watering inheritance tax rate of 60 percent.

The only exception to this top rate of inheritance tax is if the property is your main residence and it is valued at under €76,000 – in that case, tax is paid at a rate of 5.8 percent.

Married couples and family members pay a much lower rate or not tax, but if you’re not married to your tontine co-purchaser, be careful that you’re not lining yourself up for a massive tax bill in future years.

Wealth tax – depending on the value of the property, it could tip you over into the ‘wealth tax’ category when you inherit. France’s wealth tax is a real estate based tax and is levied on anyone who has real estate assets (property and land) worth €1.3 million or more.

The calculation includes property held en tontine.

Tax savings – you might hear tontines being advised as a way to limit your French tax liability.

While this used to be true, changes to tax laws means there are no no significant tax advantages to buying this way – the same is true for buying a property via an SCI, which used to represent a tax saving until the law was tightened up.

Disinheriting family members – One side effect of the tontine clause on mixed families is to effectively disinherit any children of the first person to die.

Because the property passed to the survivor, under French law, only their direct descendants – rather than any family by marriage – are entitled to automatic inheritance.

That means that the children of the surviving partner will be entitled to the statutory share of the entire asset (between 25 and 30 percent depending on the number of children), but the children of the first person to die will be entitled to nothing. Obviously you can choose to leave them something in your will, but you can only leave them some or all of the estate which is not automatically given to the children on the survivor.

Divorce/dispute – if the members of the tontine split up or (in the case of friends) fall out, then they can either sell the whole property or agree to buy each other out.

However, if one party refuses to sell, then you have very limited legal options – unlike a standard property purchase a tontine is not regarded as joint ownership, so one partner cannot be forced to sell as part of a divorce procedings, for example.

Basically the tontine can only be ended or changed with the agreement of all parties – so if you can’t agree between yourselves then you may be stuck with it.

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