WASHINGTON – A business news service in Israel has exposed what experts say is a new tax authority that targets exclusively French Jews – one unprecedented anywhere in the modern world.
According to the Globes, French citizens and their tax preparers have been astonished to hear about the new department, which they charge is discriminatory, giving rise to questions about selective enforcement.
“The procedure is new and questionable, and discriminates against French Jews,” Itay Bracha, a tax expert who represents French clients with tax authorities in Israel and France, told the Globes. “The measure is an extremely irregular and rare one in which a tax authority in a foreign country is setting up a special division to handle Jews, and recruiting an exceptionally large number of employees for it.”
Bracha says that there is no comparable department among other tax authorities in the world.
“I know of no similar department to the one founded in France, and certainly not with that number of employees,” he said. “There is a special department in the U.S. because of the need for direct communication with the authorities in Israel, and taking into account the volume of trade between Israel and the U.S., but the main purpose is absolutely not to catch tax evaders.”
He added: “Such a department, which constitutes extreme discrimination against Jews in France, does violence to equality between different citizens. Establishing such a department is an unacceptable statement by the authorities in France, and puts the Jewish community in a very unflattering spotlight.”
The move coincides with both rising anti-Semitism in France and an exodus of French Jews moving to Israel or buying second homes there in preparation for a possible move.
“At the present time, in contrast to the prevailing opinion in the French community, the announcement by French Jews that they are leaving and immigrating to Israel does not solve the Jews’ problem,” Bracha noted. “On the contrary, this act put the immigrant in the spotlight, and the authorities in France started an investigation into his case in order to detect whether he has money and assets in Israel that have not been reported in France. This is done through international exchanges of information, or through other means.”
Uri Goldman from the Goldman & Co. law firm, an expert in international taxation and money laundering, said the focus on the Jewish community in France “has a bad odor of national or political motives.”
Goldman notes new immigrants in Israel are exempt from tax reporting and payment of taxes for 10 years, but among wealthy people and owners of companies and other assets in France, the matter is more complicated.
“When the immigrant is wealthy, there is a complex situation of adjustment between tax law in Israel and overseas through the tax conventions,” he said. “This is particularly true in view of the war against unreported capital.”
The Globes reports the new tax authority was founded in the past year with 20 Hebrew-speaking employees, and it is in the process of hiring five more.
The French department was established to handle French Jewish tax evaders, and it hired employees with professional experience and a profound understanding of Israeli law to examine whether Jews were using these laws to evade taxes in France. The goal of the department is to catch French tax evaders using Israel as a tax shelter, according to the report.
“It is very, very irregular to hire 20 Hebrew-speaking employees, or any other language, in a foreign tax authority,” said one anonymous international attorney specializing in tax law who is familiar with the department. “Most tax authorities have one or two Hebrew speakers, and there are English or French-speaking employees in Israel for the purpose of signing conventions and conducting relations with the tax authorities of other countries. Every tax authority has employees that speak a foreign language, but hiring 20 or more Hebrew-speaking investigators is very irregular.”
The source also said he learned from his acquaintance with the department and its employees that some of the employees hired previously lived in Israel.
“They hired Hebrew-speaking French people, some of whom previously lived in Israel and moved back to France,” he said.
According to figures from the Israel Ministry of Immigration and Absorption, immigration from France has increased dramatically in recent years, with 1,211 new immigrants arriving in Israel from France in the first half of 2017. A study conducted at Bar-Ilan University showed that the economic benefit for the Israeli economy from the absorption of Jews from France would reach $65 billion. The study assumes that 100,000 immigrants will arrive from France by 2026.
The French embassy in Israel denies the existence of the special department.
“In the framework of the campaign against tax evasion, the authorities in France conduct investigations concerning individual cases, in accordance with the international agreements,” the embassy said in a special statement to Globes. “The authorities in France deny the existence of a special department. It is extremely important to state that the things that were written are false. Taxes in France are calculated according to risk considerations. There is therefore no connection whatsoever to the national affiliation or ethnic origin of taxpayers.”
In a follow-up release, the embassy added: “The General Directorate of Public Finances denies in the most categorical way the unfounded affirmations published today in the Globes newspaper … There is no such structure in the French tax administration. French tax legislation prohibits any distinction made between people on the basis of their origins, place of residence or membership of a particular nation or religion.”