SUPER-RICH FLEE NEW FRENCH TERROR

We're talking shock horreur: Justin Marozzi discovers that the

French government is very cross about the huge numbers of its citizens who are settling here to avoid high taxes

LONDON is empty, the autoroutes are full. The annual exodus of les rosbifs to France is in mid-cycle. The little gites in Dordogne; the waterfront apartments in St Tropez; the charming, rundown châteaux in the Loire: all are heaving with red-faced Brits, and with every bifteck we devour, with every glass of claret that gurgles down our gullets, with every overpriced espadrille we lose on the beach, we are making, bien stir, a vast net transfer of cash from Britain to France.

Think of the half a million Brits who now have homes in that beautiful country; think of the quantity of Camembert, of Gauloises, of Louis Vuitton we consume; think of the local plumbers and garagistes we keep in business — and that is before we have begun to quantify the economic impact of the tourists: 12 million of us going to France, and only 3.14 million of them repaying the compliment.

Though you might not guess it from the airs of some of the shopkeepers, the French are broadly pleased with our arrival: apart from the welcome influx of British dosh, the migration rein- forces the country's deeply held conviction that, all things consid- ered, France is a superior place.

Which makes it all the more surprising that some senior French officials are in a lather about emigration, and the — com- paratively — small number going the other way; but then these French emigres are not like the average British holidaymaker pootling about in Provence. These are seri- ous people, High Net Worth Individuals, from supermodels to dotcom dynamos. And, increasingly, they are choosing to set up homes and businesses in Britain.

Laetitia Casta, the new Marianne, the symbol of France and all things French, from fromage to foie gras, was one of the first Gallic squillionaires to be rumbled. Last April, it emerged that the proud- bosomed, Corsican cutie was residing not in Paris (horreur!), but in London (traftresse!). This might have had something to do with the higher rates of tax levied on the wealthy in France, but no less a person- age than the French minister of the interi- or, Jean-Pierre Chevenement, felt obliged to reprimand France's Millennium Bomb- shell for this act of treason.

`Laetitia Casta will fmd out very fast that property prices are much higher in London and that you have to pay twice as much in rent,' he declared at the time. 'If she gets sick, and I hope she won't, the healthcare in a British hospital will be far short of French hospitals. If she takes the metro, she will realise that the London metro is nothing like the quality of the Paris metro.'

The French government took Casta's defection pretty badly. It wasn't quite up there with Philby, mais, sacrebleu, it was close. And supermodels, however delectable, are only one, very small, piece of the emigra- tion jigsaw. If they can vote with their feet, the same is true of footballers, businessmen, singers and the super-rich. Four months after the Casta crisis, there are new signs of paranoia in the Quai d'Orsay over the con- tinuing franc-drain.

The French ambassador, the genial and civilised Daniel Bernard, recently gave a dinner for the leading lights of his country- men in Britain. At a certain moment he stood up in the mirrored splendour of his Kensington dining-room, cleared his throat, and welcomed them. 'Messieurs, mesdames,' he said, what a pleasure it was to have such a distinguished group before him. Always delightful to see fellow Frenchmen abroad, he said. On the other hand, he is said to have hinted, with the delicacy for which he is famous, there was the question of les impots, and one's tax- able residence, and of every good French citizen's duty to la patrie. History does not record exactly how this homily was received by the French plutocrats, or if they even broke off from sucking the juices from their lobster to listen. But put it this way: if His Excellency hoped to shame his fellow countrymen into giving their tax to France, rather than to Gordon Brown, they showed no sign of respond- ing.

In the past few years, the French have been arriving in the UK in greater numbers than the Norman Conquest and the Huguenots combined. In 1994, there were 49,000 registered here. By 1999, that had risen by a third to 65,000. The total number now, including those too shy to register, is estimated by French officials at 210,000.

Some are well known. One of the latest is Manchester United's flamboyant new goalkeeper Fabi- en Barthez, who joins French footballers already established here, such as David Ginola, Frank Leboeuf and Mar- cel Desailly. Of more concern to Paris, however, are the swelling ranks of super- rich business émigrés. They include men such as Philippe Foriel-Destezet, creator and chairman of Adecco, the world's lead- ing personnel services company with rev- enues in 1999 of about £4.8 billion. A graduate of the renowned business school HEC Paris and honorary Chevalier of the Legion d'honneur, Foriel-Destezet repre- sents the crème de la crème of French business. In the Forbes magazine list of the world's 482 billionaires, published last June, he came a respectable 184th with a fortune of £2.1 billion, a whisker behind Queen Beatrix of the Netherlands and Richard Branson. Foriel-Destezet, who also sits on the boards of Vivendi, Securitas and Carrefour, among other companies, is not keen to tell The Spectator why he lives in London. He does not like to give inter- views, his assistant says.

Marc Lassus, chairman and chief execu- tive of Gemplus, 'the world's leading provider of plastic- and smart-card-based solutions' with sales last year of more than £540 million, is another French zillionaire who has decided recently to make the UK his home. Lassus is the doyen of the IT industry across la Manche, the dot of French dotcom, the Fifth Republic's answer to Bill Gates. I ask his office why he chooses to live in London. 'It's not for tax reasons,' his assistant says testily. 'It's because it's easier to do business here.'

For a variety of reasons, French busi- nessmen are finding it attractive to relocate to the UK, and it pains the French authori- ties to witness it. Que faire? How can the Robin Hood government of Lionel Jospin go about its mission of robbing the rich to help the poor if businesses flee the coun- try? It eez not, 'ow you say, creecket. 'It's always been a very touchy issue for the French embassy in London and I don't know why,' says Pierre de Gasquet, London correspondent for Les Echos. `It's a bit ridiculous. They can't prevent people com- ing here. I think it's because it's linked to the tax issue, which is very sensitive. The French government doesn't like to see arti- cles saying taxes are higher in France.'

And, truth to tell, it is a popular miscon- ception to think French taxes are always higher. For many, if not most, French tax- payers, the difference between their tax system and ours is negligible. Some, includ- ing de Gasquet, are actually worse off in the UK. 'Frarildy, I pay almost double the tax here,' he says. In France he receives tax relief — le quotient familiale — on his three children. Here, since Gordon Brown chopped the married couple's allowance, there is none. British retirees are also gen- erally better off — both for tax purposes and, some would say, in terms of lifestyle — in France than in the UK.

The French taxation system is at its least benign, however, when it comes to busi- nesses and the wealthy. If you are worth more than 4.7 million francs (£434,000: hardly a huge sum these days), you are automatically subject to Pimp& de solidarite sur la fortune (ISF), a wealth tax more rem- iniscent of Seventies' socialism than la nou- velle &anomie. 'People who have sold their companies, who have 20-30 million francs sitting in their bank accounts, are much better off leaving France and settling in the UK, for example,' says Olivier Fleurot, managing director of the Financial Times. Clive Mackintosh, head of private client practice at PricewaterhouseCoopers, says the rising number of French people coming to work in the UK has much to do with the desire to escape the ISF. 'Wealth tax comes in at relatively low levels for someone who is very wealthy,' he explains. 'By coming to the UK you've got much lower income tax rates [the top band in France is 54 per cent, compared with 40 per cent in the UK] and you're avoiding the wealth tax. I should think the French government is slightly concerned about it because clearly people think the environment is healthier here than in France.'

It is not just the tax exiles who upset the French authorities. They are bad enough, but even worse are the French entrepreneurs who have decided to up and leave for Britain. What most deters them from setting up shop in France are the high social-security contributions they are obliged to pay. 'Whereas the employer's contribu- tion in the UK is 12 per cent, in France it's 43 per cent,' says Robert Anthony, who runs an international tax-planning practice in the south of France. 'And whereas the employ- ee's contribution is about 10 per cent in the UK, in France it's 20 per cent. This basically means the cost to the business in France is far in excess of the cost in the UK. The Socialist government does not seem to understand the attraction of setting up busi- nesses abroad. Why should French people go back to France when the government has such an outdated set of fiscal policies?' For French companies that need to cut the num- ber of their employees the costs are also high in social charges and regulation. 'Here in the UK, if you make a wrong business decision you can change quite quickly with- out bad consequences,' says Bruno Lescoeur, chief executive of London Elec- tricity. 'It makes business life more dynamic.'

Gerard Tardy is one of the new breed of French entrepreneurs relocating to the UK. In May last year, he founded Sitka, a ven- ture-capital firm specialising in the Euro- pean IT and healthcare sectors. For managers and owners of small businesses, it is advantageous to be in the UK, he says. On this side of the Channel there are reduced tax rates for small businesses. In France the corporate rate of tax is the same across the board. 'Based in the UK, you have more of the feeling that you're part of the global economy,' Tardy says. 'France seems to do business at a slower pace. The culture of entrepreneurship, although it has improved a lot recently, is certainly less developed in France than the UK.' What is the cost of all this to France? Who is winning the war between the two treasuries in Paris and London? Are the British tourists and retirees putting more into the French economy than the French tax exiles and entrepreneurs are putting into our own? It is a difficult calculation, but to judge by the panic-stricken reactions of the French, it seems les rosbifs are having the better of it.

Before we pat ourselves on the back and congratulate ourselves and our political leaders for being so splendid and business- friendly, however, we might do well to lis- ten to some of the less kind comments from our French guests. 'The bean-count- ing mentality of the British does not under- stand that it's not just a question of the amount of tax you pay,' says Marc Roche, London correspondent of the left-wing newspaper Le Monde. It's a question of lifestyle. 'The French are more hedonistic than the British. They don't want to live in a society that doesn't have a good road sys- tem or decent public transport, with low social security and therefore high crime, and with a poor health service. They'd rather live on the Riviera.' Except for those who come here as tax exiles, naturally.

Pierre de Gasquet of Les Echos says a Frenchman coming to live in the UK must prepare for the worst. 'You have to make sacrifices coming here in terms of the food and the quality of water, for example. You don't have the same range of choices and standard of fruit and vegetables.'

One departing French hack has had enough of la Grand-Bretagne. 'I'm fed up with it,' she whinges. 'Everything. The lack of culture, the lack of good food and the lousy healthcare. You're always sniffed at for not belonging, and asked where you come from. It's a country I've lived in for a long time and I don't like it.'

I suppose she means it. On the other hand — who knows — she might be doing the ambassador's work for him, and patri- otically deterring her countrymen from the glorious tax-efficiencies of Britain.

Justin Marozzi is contributing editor of The Spectator.

`That last mint . . . I told you it was mine.'