L’exodus… the wealthy Parisians escaping to London and elsewhere

Feature – The Evening Standard - 12 September 2012

As the richest man in France, Bernard Arnault is typical of those who inhabit the golden-stoned townhouses that help make Paris so beautiful. His own 18th-century “hôtel particulier” is on the fabled Left Bank of the Seine. It is a testament to an entrepreneur who has made £32 billion in the world of commerce yet retains a passion for art and literature. Postmodernist paintings sit alongside Louis XVI furniture in the grand salon, while rare manuscripts in a mahogany-panelled library include poetry dating back to the Middle Ages.

Near-neighbours of the LVMH luxury goods boss include François-Henri Pinault, husband of Hollywood star Salma Hayek and owner of the retail company PPR — a tycoon who also considers his taste for high culture to be as refined as his business acumen.

Such typically Gallic entrepreneurs have another major factor in common — they are all contemplating getting out of Paris because of the massive taxes being introduced by France’s new Socialist president, François Hollande.

Cities like London, where the vast majority of the 300,000-plus French people already in the UK live, top a list of preferred destinations for tax émigrés. Earlier this summer Prime Minister David Cameron said he would “roll out the red carpet” for anyone looking to escape Hollande’s punitive fiscal regime, which will soon include a top income tax rate of 75 per cent. The UK’s is at least 25 per cent lower, and London is just two hours 15 minutes from Paris by high-speed Eurostar train.

The increasingly panicked situation was thrown into sharp focus by the 63-year-old Arnault this week when he admitted to seeking Belgian nationality. Arnault insisted that his application to Brussels, where taxes are also considerably lower than France, had nothing to do with fiscal policy … but nobody believed him.

Not only does he already own a mansion in Brussels but he also has a property here in the capital, where his eldest daughter, 37-year-old Delphine, was educated at the London School of Economics. Arnault’s son, 35-year-old Antoine who works as communications director for Louis Vuitton, is also a frequent visitor to the UK, where he is seeing Russian supermodel Natalia Vodianova.

Either city would be an obvious place for Arnault to lie low while the Socialists introduce the most radically Left-wing programme since President François Mitterrand brought Communists into his cabinet in the early 1980s.

Highlighting the seriousness of the situation, François Fillon, the conservative who stepped down as prime minister in May, says it was indeed socialist economics that triggered Arnault’s move. According to Fillon: “When you take stupid decisions, you get these terrible results. The chief of one of the best companies in the world, who symbolises French knowhow and success and is known throughout the world, has been prompted to change his nationality because of the fiscal policy which is being applied in our country.”

Referring to Britain, Fillon adds: “A mountain of departures are hidden behind Bernard Arnault. You only have to go to London to see all the young French people who have left because they sense that France is a country with no room for those who succeed.”

The Left was even more pointed, with Libération newspaper, France’s equivalent of the Guardian, on Monday running a picture of Arnault clutching a travel bag under the headline: “Casse-toi, riche con!”, which is best translated into “Get lost, you rich bastard!”

It was a play on words on a similar insult used by former President Nicolas Sarkozy, who is not just a close personal friend of Arnault but someone who built his political career on persuading businessmen to build up their fortunes in France. In 2008 Sarkozy infamously told a man who refused to shake his hand in a Paris crowd: “Casse-toi, pauvre con!” — “Get lost, poor bastard!”

Thus the clear opinion expressed by Libération’s front page — and one which is shared by the vast majority of French people — is that Hollande is offering a simple, brutal message to the wealthy: get out of the country.

The head of state makes no secret of this — in 2006 he admitted in a live TV debate that “I don’t like the rich”, while earlier this year he announced “my true enemy is the world of finance”.

Arnault was so upset by the coarseness of Libération’s headline that he is suing for damages, accusing the newspaper founded by the philosopher Jean-Paul Sartre of directing a “public personal insult” at him. There is very little money at stake (damages are likely to amount to no more than a token euro) but the high-profile case will add to a public debate which is already being couched in terms of a class war.

“Arnault, and all those like him, are being told that France is now a fully Socialist country, and thus not a place where the rich can feel comfortable,” says a senior Socialist Party source. “Paris is full of multi-millionaires but they will all have to realise that they have a responsibility to the rest of society beyond their châteaux.”

Arnault, whose business empire extends to major fashion labels including Louis Vuitton and Christian Dior, has created more than 20,000 jobs on French soil alone in recent years and so already contributes a huge amount to the French economy.

In 2011 he paid himself an annual salary including bonus of just over £3.6 million — a figure which will attract a tax bill of £2.7 million under the Socialists — but it is not just the super-rich who are being targeted. From professional footballers and showbusiness stars to corporate lawyers and investment bankers, all are now candidates to leave, along with the owners of medium to large-size firms.

French celebrities contemplating a hop across the Channel because of the 75 per cent tax rate include singer Françoise Hardy, who regularly appeared in the British charts in the 1960s and recorded with Blur in the 1990s.

Before  the May presidential election, Ms Hardy said : “I’m leaving the country if Hollande wins … London is one of two cities with New York where I could consider living. Even today I will also be forced to move, to leave Paris because of the tax on fortunes.”

Christophe Jallet, a footballer with Paris St Germain (PSG), now one of the richest clubs in the world thanks to investment from Qatar, says incomes will amount to “very little” when players start to lose three quarters of it, and that many would leave. David Beckham, who came close to signing for PSG earlier this year, will be one of many multi-millionaire footballers relieved that they changed their minds.

Taxes on “global estates” (effectively anything that anyone owns anywhere), share dealing, inheritance, and a host of other assets and income sources will also be used to raise billions aimed at tackling France’s dire economic problems.

“The simple truth is that France is becoming a very expensive place for anyone earning more than they really need,” says the same Socialist source. “This fits in with our party’s principles. It is entirely right that billionaires with yachts, fleets of luxury limousines and vast art collections should contribute more.” Others point to the fact that Hollande himself owns no fewer than three properties, all in glamorous Mediterranean seaside town Cannes.

Gilles Rolland, an activist for the opposition UMP party, says: “There are thousands of talented French people and, let’s be honest, Hollande is one of them. As president he also has around six publicly funded mansions at his disposal and a hugely generous expense account for which he does not even have to provide receipts, let alone declare to the taxman.

“More scandalously still, Hollande’s economic policies display complete ignorance about the workings of the global economy — if hard-working French people want to set up somewhere else then thousands more will follow.”

A spokesman for Arnault insisted to the Evening Standard that the tycoon had no intention of avoiding his tax responsibilities and would remain in Paris. Whether such statements will hold true in the fast-paced world of international business remains to be seen. But there is no doubt that France’s richest man has become a figurehead for those already leaving the country.

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