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Important Information

Depardieu, taxes and untrodden paths


12/02/2013

Certain recent news took the world by surprise, when Gerard Depardieu decided to move to Russia and soon after received Russian citizenship. Vladimir Putin personally handed him his Russian ID Card. Naturally, the media and Internet exploded with all sorts of comments – from restrained skepticism to grotesque humor. These, of course, include similarities between Depardieu and Russians – the love for alcohol and the specifics of national behaviour in public spaces are compared – and also, the possibility of Depardieu joining the party “United Russia” is brought into discussion.

But we suggest narrowing our analysis to the classical question: how did all this begin? It all started with taxes! Yes, the reason behind such an extravagant measure taken by the French actor was his dissatisfaction with the policy of his own former government, which decided that the rich should also suffer, sharing with the poor, and submitted a bill to the parliament, proposing a 75% tax applied to the rich (however, since then the situation has changed, as the bill was rejected).  Judging by the reaction of the French, their more well-to-do citizens have not yet reached such a level of maturity as to happily, but at the same time compulsorily, offer ¾ of their income to the state. Many cultural and artistic figures declared their intentions to leave France. For example, Brigitte Bardot intends to follow in Depardieu’s footsteps and move to Russia, while Jean-Michel Jarre, analyzing the situation in a more familiar way for the French, is considering relocation to the foggy Albion.

What is all this telling us? That all the rumors about the death of the offshore industry and about the fact that tomorrow severe measures will be taken, which will make it impossible to avoid taxation are nothing else but a utopia. There will always be countries where taxes are higher than in others. There will be governments that offer certain tax benefits: to scientists, artists, talented students, entrepreneurs, investors. Without a doubt, international financial supervisory organizations will do everything in their power to make it difficult to find a legal way to obtain some tax benefits. Most gates will be closed, but then again, near every gate there is always a door. Or a service entrance. Or a backdoor for motor transport. The experts’ role in the search for acceptable decisions is growing, since they are the ones that have experience in this area of expertise. The cost of incorporating a tax-saving structure is also growing. But people who work very hard in order to develop their business, should know for sure that the state will not take more than half of their earnings, that children may receive what their parents gathered through hard work. And no financial inquisitor can ever change that.

You may think that we have strayed too far from the topic – that is, from Gerard Depardieu and Russia. Not at all. For Depardieu, Russia represents an offshore jurisdiction, in its original understanding, meaning a tax haven. It is important to mention that a 13% tax on income for individuals is a pretty “offshore” rate in present times, taking into consideration the fact that the lowest tax in EU is 10% (Bulgaria and Cyprus) and EU members that collect significantly higher taxes from their citizens, always complain about it. So this entire situation with Depardieu is pretty good publicity for Russia, especially if it has a continuation, and more international stars decide to move there. And this is very likely to happen, considering that in the past decades stars have been seriously oppressed by the tax man – let’s just remember Sophia Loren, who was even sentenced to jail because she tried to avoid paying taxes, or the situation with Pavarotti.

And now here is a conclusion for the readers of our website: let’s not lose our skepticism, when reading all sort of news. Those who lived in Soviet times should remember how they used to read newspapers then – we were skeptical of all the texts. For the past few years of the market-based economy and money dictatorship, for some reason presented as democracy, we have become somewhat unaccustomed to being critical about what is written in newspapers and on the Internet. And they always represent someone’s interests and this is exactly why we shouldn’t rely on their objectivity. Those who were born after the fall of the Soviet regime, and also those who did not get to know it (westerners, for example), should simply analyze everything they read, thinking to themselves: “who profits from this?”.

Everything we hear about the death of the offshore industry still remains to be seen. For every problem there is always a solution; we just need to find it first. Times change, together with possibilities and approaches; and this is just as valid in the offshore industry, as it is in everything else in life. Let’s wait without anxiousness, search for possibilities and solutions and, when the time comes, we can simply leave the beaten track of “simple offshore” and walk the less visible, but not too difficult path of “tax planning” and “asset management”.

 


 

 

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