Earlier this year, we asked people in finance how happy they were with their pay. A 23 year-old working in a small/mid cap private equity fund in Paris responded to say he was very unhappy. At just €50K, including salary and bonus, he said his pay was paltry. Worse, he complained of high taxes and high living costs. He was, he said, €20k short of what was necessary to get by.
That junior is unlikely to be helped by the latest French tax reform, but private equity professionals moving into Paris from elsewhere (say London) could benefit.
Les Echos reports that the French National Assembly voted on Friday to cut tax on carried interest to 30% for fund managers who move to France from overseas. To be eligible for the scheme, at least 1% of the funds under management (in the fund generating the carried interest) will need to come from employees, and carried interest must not be collected for five years after the fund's inception.
One French fund manager said the changes were unlikely to apply to existing funds, but could help make France more appealing to new funds - particularly as London finance professionals still associate France with the 75% tax rates of the Francois Holland period.
It may be just the nudge Paris needs. In February this year, KKR's head of operations in EMEA Johannes Huth, said it was becoming more difficult to attract private equity talent to the UK as a result of Brexit and that the fund had opened an office in Frankfurt to accommodate Germans who didn't want to move. Huth himself moved to Paris for personal reasons in early 2017. He told the Financial Times that Brexit would be a factor in considering whether to invest in the UK, and that it would be "useful" for KKR "to be a little bit more present" in Paris under the business-friendly government of President Macron.
Ahead of Brexit, there are already signs that foreign funds are arriving. Earlier this week, the Ontario pension fund and Singaporean sovereign debt fund bought two buildings in the La Défense area of Paris.
Taxes aside, private equity professionals seem to like Paris. Stephen Schwarzman, Blackstone's chief executive, has close ties to Paris and quietly spent around six months living there in 2010.
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