Paris (Photo: instagram)
According to real-estate agents and financial advisers, a large group of high-end properties are hitting the market as business folks are trying to leave France before a stiff tax rise hits.
"It's nearly a general panic. Some 400 to 500 residences worth more than €1 million have come onto the Paris market," a manager at Daniel Feau, a real-estate broker that specialises in high-end property, told AFP France.
While it is not yet as serious as the exodus of rich Frenchmen after the election of Socialist president Francois Mitterrand in 1981, real-estate agents said the tax plans of new Socialist President Francois Hollande are having a noticeable effect.
While the Socialists' plan to raise the tax rate to 75 per cent on income above €1 million per year has generated the most headlines, a sharp increase in taxes on capital gains from the sales of stock and company stakes is pushing most people to leave, according Didier Bugeon, head of the wealth manager Equance.
French entrepreneurs have complained vociferously against a proposal in the Socialists' 2013 budget to increase the capital-gains tax on sales of company stakes, which they argue will kill the market for innovative start-up companies.
Entrepreneurs in the high-tech sector in particular often invest their own money and take low salaries in the hope they can later sell the company for a large sum.
They say a stiff increase in capital-gains tax would remove incentives to do this in France. They also argue that capital has already been taxed several times in the making.
The government has since backtracked, and Budget Minister Jerome Cahuzac has pledged to return to the status quo when someone who has created a company seeks to sell it later.
Officials are looking for ways to reduce the country's excessive public deficit and debt, and Hollande won election on a platform of making the wealthy carry more of the load.
Bugeon said he was seeing start-up entrepreneurs looking to move their headquarters out of France and taking their families with them.
With the internet "it is now possible to work in any corner of the world and come and spend one week a month in France", said Thibault de Saint Vincent, president of Barnes France, the principal competitor to Daniel Feau.
"Those who are going abroad fear a future tax on capital movements," he added.
Daniel Feau agreed that the profile of those who are leaving has changed, from the idle rich to "managers of major international corporations, entrepreneurs and investors much younger than previously who are scared of the marginal tax rate of 62.21 per cent on sales of stock".
The head of the employers federation Medef (Mouvement des Entreprises de France), Laurence Parisot, has complained recently of emerging "anti-enterprise racism" in France.
No one is certain if the rush to the exit will continue, but Daniel Feau noted: "Nobody until now believed that the capital gains on shares would be taxed so high."
The preferred destinations of those leaving are London, New York and Geneva, as well as Canada, Israel and Singapore, said Laurent Demeure, head of Coldwell Banker France.
He also noted that Brussels remained a favourite of older people who had already sold their business interests and were looking to benefit from Belgium's lighter taxation of trusts to pass on inheritances to their children.