business‎ > ‎

London prepares for French tax exiles

posted 30 Apr 2012, 08:39 by Mpelembe   [ updated 30 Apr 2012, 08:40 ]

Some of London's plushest neighbourhoods are attracting interest from France's super-rich. They're concerned about the prospect of a 75% top rate of tax which presidential front-runner Francois Hollande intends to introduce if he wins the election on May 6.

FRANCE-WEALTH TAX  - A posh penthouse in one of London's most exclusive postcodes.

South Kensington is also home to one of the largest groups of French nationals outside Paris.

And there could be more on the way if Francois Hollande wins the French election on May 6.

James Pace from London property firm Knight Frank says there's been a surge in interest from across the channel.

James Pace, Head of the south Kensington branch of Knight Frank, saying:

"Whilst the rest of Europe has seen interest drop by 10 percent, we've seen French interest increase by about 30 percent and this has been predominantly at the top end of the market at the £5 million plus so it's obviously interest from people who are looking to move here and live here as opposed to people who are just looking to invest in smaller rental investments."

France is the euro zone's second biggest economy.

But it's battling high unemployment, record debt and weak growth.

The two man presidential candidates have both vowed to raise taxes to rebalance the books.

President Nicolas Sarkozy plans to target wealthy tax exiles if re-elected.

But it's his Socialist rival Francois Hollande that has France's super-rich really worried.

Laurent Leclercq is a tax specialist with legal firm Fidal in Paris.

Laurent Leclercq, tax specialist, Fidal, saying:

"Mr Hollande proposes to set up a new tax rate of 75% on incomes exceeding 1 million euros. These high taxes may lead some people who have not considered yet to leave the country, to leave the country.

Hollande also plans a 45 percent tax rate for those earning 150,000 euros.

And he'll limit executive pay to 20 times the average wage.

But it's the super tax for the really high earners which could send wealthy French families fleeing across the channel.

Laurent Leclercq, tax specialist, Fidal, saying:

"The estimated may vary from a poll to poll but we are talking about a few thousand families."

James Pace, Head of the south Kensington branch of Knight Frank, saying:

"I think it's a very real possibility. London is a great place for the French to come to and with an influx of interest from France I think there will be even more demand for the relatively little stock that we have available in prime central London.

There hasn't been any serious interest in this apartment yet but that could change after the French elections if the next government chooses to and is successful in implementing tough new tax laws on the super-rich.

The latest polls shows Hollande is on course to win - South Kensington's French community could be about to get bigger.

Hayley Platt, Reuters.