Entente Cordiale takes a hit!
Jersey has long had a close relationship with France; until 1204 it was Norman, and today excellent relationships are enjoyed with Normandy and Brittany. There are significant and frequent exchanges between business, educational and cultural associations. Sadly this entente cordiale is not always reflected in the French administration in Paris where Jersey has from time to time been a handy blame candidate for some of France’s fiscal troubles, despite our business footprint with French citizens being very small.29 August 2013
President Hollande with falling popularity ratings is in considerable difficulty. Debt has rocketed as a percentage of GDP, restrictive employment practises are rife, the rich are fleeing punitive taxation, and the French work fewer hours and have more holidays, and retire earlier than any European nation. The consequence is their GDP is falling and their costs and debt are rising.
The Paris based OECD has a natural propensity to be sympathetic to France but even their policy wonks feel the country has some pretty big issues, illustrated by the chart below, which shows weak GDP per capita and inexorably rising government expenditure.
Given the French administration is strapped for cash it is a sad fact that from time to time they have a tendency to sabre rattle on competition issues and on occasion take some pretty arbitrary action. This was manifested in threatening the steel conglomerate Mittal, for not protecting unprofitable businesses and French jobs at any cost.
However the announcement yesterday that they have decided to classify Jersey as a non cooperative jurisdiction takes the biscuit for front and is frankly astonishing.
The pretext for this move is Jersey is in the opinion of the French tax administration ‘uncooperative’ on information exchange. The contention is ludicrous given the track record of Jersey in the transparency field.
Let’s rehearse the facts.
Jersey entered the OECD information exchange programme voluntarily in 2002; 11 years ago. We have now completed, agreed or initialled over 50 exchange of information agreements and concluded our agreement with France in 2009, operative from 2010 and information has been exchanged, according to our authorities entirely in accordance with the terms of the treaty.
The independent view of Jersey's performance and track record on information exchange was set out by the OECD Global Forum, the body responsible for policing the system in October 2011 when Jersey was described by the Peer Review Group as having ‘practices which to date have demonstrated a responsive and co-operative approach.’ It further indicated positively that the speed with which Jersey responded to requests was in marked contrast to the time taken by many other countries.
Given our recent actions – G20 Action Plan, agreeing to join the OECD Multilateral Convention, joining the EU G5 project on AEOI based on FATCA, positive comments from the Global Forum and meeting the EU requirements of compliance with the Code of Conduct on Business Taxation, and the decision to move to AEOI for the EUSD – our inclusion on the French list is nothing short of astonishing. That’s politics for you!
The Jersey government is engaged on the issue and is confident that any process issues can be resolved.
Frustrating but real politik – C’est la vie!