Suspension of the new decree allowing public access to the French trust register

The executive decree of May 10^th 2016, completed by a budget order of June 21^st 2016, set forth that the trust reg-ister was to be accessible on June 30^th 2016 and would be freely accessible online by anyone with an electronic identifier (see our May 30^th Tax Alert).

This decision is the consequence of summary judgment plea filed 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 pressure.

Public consultation of the trust register is no longer possible.

Suspension of public access to the trust register

The French Conseil d’Etat concluded that the public disclosure of an individual’s testamentary intentions and the resulting pressure justified, first, the urgent nature of the decision for the plaintiff, and secondly, the argument based on respect for private life gave rise to doubts on the legality of the executive decree.
Hence, the French Conseil d’Etat provisionally suspended the executive decree of May 10^th 2016 regarding the public access to the trust register.

Constitutionality set to be examined by the French Constitutional Council

Concerning the claim on compliance of this decree with the right to respect for private life, the French Conseil d’Etat referred the question to the French Constitutional council (“Conseil constitutionnel”). To date the French Constitutional council decision remains outstanding.

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The suspension 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.

However, we note that the French Constitutional council recently declared unconstitutional the 5% fine on the bal-ance of undeclared foreign accounts on the basis that it is disproportionate to the infraction of not reporting foreign accounts. Accordingly, there is reason to doubt the constitutionality of the 12.5% fine on undeclared trust assets.

The suspension of public access to the trust register is only provisional. Hence, our team recommends that one remain vigilant regarding potential access. While waiting for a definitive decision, our team remains at your disposal to analyze your situation.