France’s hung Parliament and deeply divisive election campaign have left many of the country’s richest residents increasingly worried about political and fiscal instability, to the point where some may decide to leave, wealth managers say.
Their warning comes as the main political parties jockey to gain control of the National Assembly — which is now roughly split into three blocks — and form a new government. The possibility that some of the proposals for higher taxes put forward during the campaign to pay for costly spending programs could soon become law has left some individuals weighing options about how to protect themselves.
“People who can leave will leave if extreme policies are adopted,” said Emmanuel Angelier, president and co-founder of the wealth management firm La Financiere d’Orion. “France would no longer be attractive for foreigners, and the rich would go.”
Angelier is among wealth advisers who have fielded calls from panicked clients during the four weeks of campaigning and two rounds of voting that ended Sunday, with some sending capital abroad and beginning investigations into possible expatriation.
While the ambiguous election outcome provided a measure of relief because the extreme parties on the right and the left didn’t gain outright power, the situation was a wake-up call for potential volatility ahead of the 2027 presidential election, they said.
“We have new clients like top executives who are asking what they can do to shield themselves,” said Xenia Legendre, a Paris-based managing partner at the law firm Hogan Lovells. “Following Brexit, there was an influx of bankers into France, but these high-earners will leave because they won’t want to pay more taxes.”
French parliamentary gridlock and the election of a Labour government in the UK have raised the possibility of higher taxes for both countries’ top earners. UK Prime Minister Keir Starmer has pledged to eliminate certain inheritance tax breaks, while in France Marine Le Pen’s far-right National Rally party and the leftist alliance New Popular Front took direct aim at billionaires during the campaign.
Le Pen’s party isn’t in a position to form a government, so the question has become to what extent the left alliance — which unexpectedly won the most seats — will hold sway in a future administration. Lawmakers could not only undo measures put in place by President Emmanuel Macron that are considered more friendly to the rich, but also push through policies like a broader wealth tax.
The New Popular Front — which includes Socialist, Green and the France Unbowed parties — promised to pass a law to “abolish the privileges of billionaires.” In addition to reinstating a wider wealth tax, their platform called for scrapping France’s flat tax and reviving an exit levy, raising income taxes to a top marginal rate of 90% and overhauling succession rules to include a cap on inheritance.
“Some people are considering whether they should stay in France,” Legendre said. “There is a lot of international mobility now; people move around, so the question becomes whether moving can help them optimize their fiscal situation.”
The alternatives include places like Italy, Dubai, Singapore and the U.S., she and others said. But relocation takes time, and the choices are sometimes difficult, depending on the individual’s family and professional circumstances.
In France, Macron spent the past seven years courting the country’s well-heeled residents in a bid to keep them investing and creating jobs. In 2018, a year after first coming to office, his government narrowed an existing wealth tax so that it applied only to property, created a flat tax of 30% on savings income and has maintained the controversial Dutreil pact that can dramatically reduce inheritance taxes on family-owned businesses.
The moves, which tied in with Macron’s other pro-business reforms, helped boost investment, according to the government, and improve France’s standing as an attractive place for companies. They also appeared to stem the net outflow of wealthy to other countries.
In a letter published in France’s regional press Wednesday, Macron called on parties that represent “republican forces” to build a broad majority from the political center to shut out both the far right and far left.
WORLD'S RICHEST
France is home to some of the world’s richest individuals, including LVMH luxury tycoon Bernard Arnault and L’Oreal SA cosmetics heiress Francoise Bettencourt Meyers, according to the Bloomberg Billionaires Index. The number of dollar millionaires in the country is expected to increase by 16% over the next five years, according to the UBS Global Wealth Report 2024 published Wednesday.
Yet the cohort is now spooked. As talks between political leaders intensify about forming a government, decisions on investment, hiring and real estate deals have been deferred and fundraising in venture capital interrupted, Patrick Martin, head of France’s main business lobby Medef, said in an interview this week in the Les Echos newspaper. Legendre said some financing operations have been put on hold.
She and other advisers to the wealthy said fears are also increasing about the potential for politics-related social unrest in France in light of the at times violent street protests that have broken out in recent years. Those include the Yellow Vest movement, the demonstrations and strikes against pension reform, and riots related to a police shooting last year.
Julien Magitteri, a private wealth adviser and founding partner of the Barnes Family Office by Come, said some of his clients didn’t even wait for the second round of voting in the election before moving capital to more stable places such as Switzerland and Luxembourg.
“Foreign investors are taking a lot more time these days to complete operations,” he said. “We have had a climate of trust and stability. In the space of a few days, this has been wiped out, with little visibility of what’s to come.”