François Hollande to get tough on UHNWIs

Mr Hollande, the first socialist French president to take power in 17 years, famously fought his campaign as a ‘war on the rich’, warning the country’s UHNWIs that they face taxes of 75 per cent on their earnings. At this early stage, it is too early to tell whether Mr Hollande will be able to implement such drastic measures against the country’s most influential industrialists but, as The Economist’s European commentator ‘Charlemagne’ put it in a recent article, “At present, the financial markets seem untroubled by the election of a man who once described them as his true enemy.”

Olivier Blanchet, head of yacht finance at highly rated European bank BNP Paribas, was [surprisingly] supportive of Mr Hollande’s potential measures. Blanchet was quick to stress the meaning of French socialism, which equates to social democracy and not communism, and said that Mr Hollande’s economic strategy could support and bolster the nation’s finances.

Mr Hollande’s policies will create, he said, “No more trouble or concerns for French tax payers than the existing rules; nothing more, nothing less.”


As long as French citizens “follow the existing rules”, he added, “and [the government eliminates] some bad practices such as avoidance of paying VAT, private use with a commercial registration, social charges for the crew,” Mr Hollande’s tenure has the potential to serve the superyacht industry in France well.

Elisabeth Niek, charter department manager at CSO Yachts, acknowledged the concern of those working in luxury industries but highlighted the importance of upcoming National Assembly elections, which will decide the composition of the legislature:

“It is a bit early to [predict what will happen] as we have the Assemblée Nationale elections in June and that could affect Mr. Hollande's options on this matter. [After all] all decisions taken by the French government have to be approved by both assemblies – the Assemblée Nationale and the Sénat.

“Of course the yachting community is very worried about the new president’s ‘war against the rich’ and the crisis this could generate in France.” But Niek believes that Mr Hollande’s potential reforms do not carry as much risk as fiscal developments elsewhere: “The new Italian IVA laws could affect superyacht business, not only in France, but in the whole European Union.”

The IVA laws that Niek refers to consist of a new stipulation that offers commercial owners a 6.3 per cent VAT rate on charter returns, on the proviso they appoint an Italian tax representative. However, in a note issued by Moore Stephens' Ayuk Ntuiabane, he claims the situation is not quite as transparent as it first appears:

"Not for the last time Italy wins first prize for grabbing the headlines at the onset of the yachting season. But...as we wait in joyful hope reality is, it is raining on this heady parade. Italy requires VAT to be levied on importations, regardless of who effects them. Italy has a live history of arresting yachts for not accounting for VAT on the hull value. Italy requires yachting businesses already established there to import the yachts they operate and account for VAT on their value. Italy charges its taxpayers a yacht ownership tax on top of VAT."



Related Links

BNP Paribas Profile | BNP Paribas Website

CSO Yachts Profile | CSO Yachts Website

Moore Stephens Profile | Moore Stephens Website

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