Friday , August 12 2022

Carmignac aimed at tax fraud


Finansinspektionen has initiated a preliminary investigation. The studies concern compensation for employees via Luxembourg.

According to a report by the French tax authorities, the Prosecutor's Office (PNF) sixteen months ago opened a preliminary investigation against the asset management company Carmignac Gestion, reporting "World".

The survey focuses on suspicions of "tax fraud" and "tax evasion of laundry," the newspaper said. Investigators are particularly interested in remuneration method for certain senior executives [de Carmignac Gestion, NDLR], through financial packages through Luxembourg, where the company has established a subsidiary ".

Dividends in Luxembourg instead of salary

In particular, the French tax authorities are forced to dispute the system, which allowed employees to pay dividends from the Luxembourg structure. Payment of employees in shares or dividends is a widespread exercise in asset management, as it means that the remuneration to senior executives is linked to the company's earnings. However, a misleading interpretation of the granddaughter program would have allowed the management company to reduce its tax rate in France through this remuneration method. Luxembourg is indeed a country with very beneficial taxation. And the French and Luxembourg tax administrations are opposed to the treatment to be granted this kind of financial technology.

Customers are not affected

"The subject is the chosen remuneration option for some managers around 2010-2011. The parent subsidy program enabled dividends through this subsidiary. The Carmignac Group has used a system proposed by the French and Luxembourg tax authorities in an open manner," explains company lawyer Jean Tamalet in Les Echos . He also explains that "the tax authority's position has developed, today this practice is no longer relevant and the company has dissolved."

The management company particularly feared that the case does not encourage customers to withdraw their assets and indicates that the investigation is not about the management of the funds but only the company. Carmignac also states that it "is in violation of the recovery as well as the criminal law and has initiated a litigation procedure while cautiously insuring the recovery amount to interrupt the interest rate."

Reduce outstanding

The case comes in the worst moment for Carmignac. The company's flagship funds have written disappointing achievements in recent years and outstandings are falling. They increased from 58 billion euros by the end of 2016 to 56.5 billion by the end of 2017. By 2018, they did not contribute to raising the bar. Assets managed, melted from 55 billion euros at the end of June to 50 billion at the end of September.


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