French public register of trusts declared unconstitutional

Public register of trusts, established in December 2013 by a law on action against tax fraud and serious economic and financial crime, has been accessible to everyone online as of June 30, 2016.

This register contained the identification of the trust reported in the French filing obligations, the identification of the trustees, the settlor and the beneficiaries as well as the date of setting up of the trust.

By a decision dated October 21, 2016, the French Conseil constitutionnel ruled that the Public register of trusts is unconstitutional for breach of privacy rights.

This decision is the consequence of a judgment plea filed by a tax resident of France who had settled a trust in the US. Her grievance was that the register had revealed her testamentary intentions, exposing her to family pressure.

By way of a priority preliminary ruling on constitutionality (French Question Prioritaire de Constitutionnalité, QPC), the French Conseil d’Etat has decided to refer the question of the compliance of this public register with the right to respect for private life to the French Conseil constitutionnel.

As a result of this decision, public consultation of the trust register is no longer possible.

Decision n° 2016-591 QPC of the French Conseil Constitutionnel dated 21 October 2016

The French Conseil constitutionnel ruled that the mention, on a public register, of the name of the settlor, the beneficiaries and the trustee of a trust, provides information to the public on the way a person disposes of his assets and therefore constitutes a breach of his privacy rights.

In addition, the French Conseil constitutionnel has considered that the release of the French public register of trust was a disproportionate measure due to the absence of any limitation regarding the people and the reasons allowing access to the public register.

As a consequence, the French Conseil constitutionnel declared the public register of trusts unconstitutional.

Conclusion

It is possible that the French legislator is not giving up the concept of such public register, and bring the register into compliance with the Constitution. We shall of course keep you updated of any change that could be decided.

We draw your attention to the fact that the removal of public access to the trust register does not justify any exemption from reporting the existence of the trust or the annual trust filing. Failure to report a trust is punishable by a fine of up to 12.5% of the trust assets.

Christina Melady

Christina Melady, Partner, has over 23 years’ experience practicing tax law in France and advises both companies and managers on personal tax matters. Christina created the specialized practice in France […]

Diane Artis

Diane Artis, Partner, has over 20 years’ experience in French and international individual income tax matters. She assists leading worldwide companies in French individual tax matters, including income tax consequences […]

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Alexis Fillinger

Alexis Fillinger has more than 11 years of practicing. He advises both companies and individuals on personal tax matters, in international context He is specialized in the structuring of investment […]

Nadia Hamya

Nadia Hamya, Partner, has acquired a strong experience in individual tax and international mobility matters. She regularly assists major French and foreign international companies with their international mobility policy, notably […]

Nicolas Meurant

Nicolas Meurant, Partner, has over 15 years’ experience providing advice to corporations and individuals in individual tax and Global equity area, in the structuring of shareholding schemes, as well as […]