France is for the first time allowing people to make voluntary disclosures so that those who have stashed untaxed money in secret foreign accounts can quietly come clean. Since launching a special unit, or disclosure desk, more than three weeks ago, the government has fielded some 25 telephone calls a day from individuals seeking to declare hidden assets, according to officials close to the Budget Ministry.
The move is a small but significant step in the country's quest to combat tax evasion that has centred on spearheading a global campaign to end banking secrecy and tax havens. France and Germany both pushed hard for global leaders to agree to blacklist tax havens at a G20 summit of the largest developed and emerging economies last month, raising the spectre of sanctions against centres that refused to cooperate. By urging nationals to come forward, France is adopting a practical approach to the issue of undeclared tax.
"This marks a big change. Before, France was opposed as it would legitimise the fact that people have been cheating and you agree to forget about it," said Bertrand Lavayssiere, managing director of global financial services with business consultancy Capgemini Group. "Conditions have changed. The French system is more pragmatic," said Lavayssiere.
In contrast with Germany and Italy, France has shunned tax amnesties and had never offered any chance to repent and pay. Its efforts are part of a broader trend that has seen more and more Germans owning up to foreign accounts used to evade taxes as a result of pledges by the likes of Switzerland - which manages close to one third of the world's offshore wealth - to loosen its banking secrecy rules.
"Historically it has been very difficult for France to offer voluntary disclosure. This is a shift," Francis Rojas, a partner at law and tax firm Withers LLP told a recent conference in Zurich. Many US clients of Swiss bank UBS have also been advised by their lawyers to come clean after the bank became the target of a high-profile US investigation, according to tax lawyers.
The US government said in March it would offer lower fines and no criminal charges to those who freely disclosed their untaxed assets over the next six months. French nationals who voluntarily disclose undeclared offshore assets would have to pay the full amount of their tax bill, plus interest on what they owe. They may face penalties but would escape penal charges. No figures were immediately available on the approximate amount of funds lost to France every year to tax evasion, or how much France might recoup through this initiative.
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