In a ruling that may have particular significance for financial privacy, a top French court has ruled against the idea of a public register of trusts with a French connection.

A top French court has struck what may be a crucial blow for financial privacy in the country, in a declaration against a public registry of trusts.

According to an alert on Friday from Paris-based law firm Arkwood, the French Constitutional Court has said that a public registry of trusts having ties with France imposes a disproportionate infringement to the right to privacy. (See interview by this publication with Arkwood on French issues here.)

As a consequence of the court's statement, the whole public registry of trusts has been declared unconstitutional (not only its public nature), effective as from the publication of the decision in the French Official Gazette, the law firm said in a statement emailed to WealthBriefing.
 
In practice, the public registry of trusts was not accessible anymore since a temporary decision of suspension from the French administrative Supreme Court (Conseil d’Etat) dated 22 July 2016, the law firm said. Arkwood supported the case.

The issue of public registers of trusts has gained traction around the world in recent years as governments have sought to chase after beneficial owners and hence foil alleged tax evaders. In their defence, it is argued that legitimate privacy, and security of owners and their persons, can be put at risk. (To view more on whether public registries are even the most effective way to deal with abuses, see here).

As recently explained in these pages by offshore law firm Appleby (see here), the French public register of trusts went live on 30 June 2016, publishing the names of settlors and beneficiaries with a French nexus who had filed tax information with the French Revenue Authority. Under French tax law, trustees are subject to annual and event-based reporting requirements where the trustee, settlor or a beneficiary are French resident.  

However, settlors and beneficiaries filing such tax information did not consent to their information being made openly public in this way. An American French resident citizen challenged her details being made public on the register, claiming it ran counter to her right to privacy, particularly as she, in good faith, supplied the French government with data for tax purposes and without permission for it to be made public.

Consequently, on 1 August 2016, the French Government suspended the register pending a full hearing at the French Constitutional Court.