A bipartisan proposal in France aims to tackle a tax fraud scheme known as “CumCum” that is estimated to cost the government nearly 3 billion euros in lost revenue annually. The proposal, signed by over thirty parliamentarians from various political backgrounds, is set to be introduced in both the National Assembly and the Senate. The scheme involves non-resident owners of French company shares avoiding withholding tax on dividends by temporarily transferring their shares to entities exempt from the tax. This practice, which has been identified as a form of tax fraud, has been the target of recent legal actions by French tax authorities.
The lobbying efforts of banks have defended the “CumCum” scheme as a legitimate form of dividend arbitrage necessary for financial market operations, rather than a tax evasion strategy. However, the significant impact of this practice on public finances has raised concerns, especially in light of the budgetary constraints faced by the government. The proposal by the parliamentarians seeks to provide a clear legal framework for the tax authorities to crack down on dividend arbitrage used for tax evasion purposes. This initiative is timely, as recent court decisions have weakened the legal position of the French tax authorities in pursuing cases related to the “CumCum” scheme.
The proposal has garnered support from a diverse group of parliamentarians, highlighting the broad consensus on the need to address tax fraud and ensure that all taxpayers contribute their fair share. The issue of tax fairness and equality is emphasized by the lawmakers behind the proposal, who stress the importance of upholding the principle of everyone paying their taxes according to their means. By targeting schemes like “CumCum” that allow certain individuals to exploit tax loopholes and avoid their tax obligations, the proposal aims to strengthen the government’s ability to enforce tax laws and recover lost revenue.
The revelation of the widespread use of the “CumCum” scheme, as highlighted in the “CumEx Files” investigation published by Le Monde and other European media outlets in 2018, has sparked public outrage and calls for action. The scale of the tax evasion facilitated by such schemes has underscored the urgency of effective measures to combat fraudulent practices and safeguard public finances. The proposed legislation represents a significant step towards closing loopholes that enable tax evasion and ensuring that individuals and entities are held accountable for their actions.
The support for the proposal from politicians across the political spectrum demonstrates a shared commitment to addressing tax fraud and protecting the integrity of the tax system. By uniting against practices like “CumCum” that exploit tax regulations for personal gain, lawmakers are taking a stand against financial misconduct and advocating for a fair and transparent tax system. The potential impact of the proposed legislation in generating additional revenue for the government underscores the importance of tackling tax evasion and ensuring that all taxpayers fulfill their obligations to contribute to the public good.
