The deadline for filing with French Tax Authorities names, addresses and other details including value of trust assets as at 1^st January 2013 and the 1.5% levy, falls due next Monday 17^th June 2013.  Failure to comply opens up Trustees and members to penalties not least a €10,000 or 5% penalty if greater on trust assets.  Concept continues to take professional advice and has sought and expects an adjournment to 30^th September.

Negotiations continue with French authorities through our Paris advisers as to exactly what exemptions exist for pension trusts.  Some clarity is now available although the effects of the amendments to Wealth Tax that created specific provisions for Trusts have far reaching consequences, even for pension trusts.  The below provides some information but does not constitute tax advice, should not be relied upon and is no substitute for proper tax advice which Concept strongly recommends member and/or advisers to seek.

Whilst a specific exemption is provided for pension trusts, thus relieving members and trustees from reporting and payment obligations, the exemption is limited.  Technically, for a member, It covers only the plans set up by a company or group of companies to manage their pension rights acquired under their occupation.

There are other exemptions not least the fact that Wealth taxes do not appear to fall due on French persons who have assets not exceeding €1.3mil, also it appears that someone moving to France is not obliged to report until they have been 5 years resident in France.  Again proper advice needs to be taken if reliance is to be placed on these possible exemptions.

If exemptions do not apply then there are two types of reports required.  Firstly an event type report that inter alia, describes events such as death, new pension trust members or those terminating the arrangement.  Secondly, there is the annual report, giving names and addresses of pension trust members with associated trust values at 1^st January.  The reporting is then made in each June following.

This reporting is in effect a “cross-check” by French authorities as a French resident person has these obligations already to file such information on their wealth tax reports and for those members that are doing this and paying the levy where relevant, it appears nothing more is required.

The complexity of this issue remains the conflict between our understanding of trusts from an Anglo Saxon point of view and French Tax Articles seeking to describe what a trust is using Civil law principles.

Concept are expecting to receive an adjournment to 30^th September 2013 to allow matters to be clarified with French authorities – it is however likely that with the possible exception of Occupationally funded pensions, those persons otherwise exempt or those who have correctly personally filed and paid their wealth taxes in France – we as Trustees will be required to report and pay from members funds the levies due.

Concept expects shortly to be contacting members and their advisers with documentation to allow members to certify any relevant exemption.

Further technical detail is available within the IFA portal under downloads/general/technical guidance notes.

Concept are currently in the process of contacting all of their French resident scheme members with interests held within a personal pension trust, such as the range of Aurora International Pension Plans, including the “former” Aurora QROPS.

There have been a number of recent legislative changes in France that directly affect offshore trusts, their reporting to the French authorities, and the trusts’ liability to French tax. We understand, also, that any trust, even if the Member is resident outside France, where relevant French situs assets form part of the underlying investments, may also have obligations to report. Concept has written directly to the French authorities to seek clarification on this matter and the application to pension trusts, but has to date received no response.

This is a complex area of taxation on which your member may well have already taken advice, if they have not, we would strongly recommend that they do so.

Concept is giving its French resident members, in certain circumstances, the option to transfer their personal pension trust to a non-trust based pension arrangement, such as the Aurora Libertaï Retirement Benefits Contract. This type of scheme arrangement may fall outside of this new French legislation as the interests are not held within a trust based pension.

Concept’s default position will be to make reports to the French Authorities and will require sight of supporting tax advice for any member not wishing to report.

Roger Berry, Managing Director of Concept has recently been quoted in relation to this matter  in International Adviser