The register of France-connected trusts compiled by the French tax authority was opened to the public on 5 July and closed provisionally soon after, pending a constitutional case. That case has now been resolved in favour of greater privacy.

The Constitutional Council of France met on 20 October last year to consider an argument raised by Mrs Helen S, an American residing in France, that the second paragraph of article 1649 AB of the French General Tax Code (which permits public access to the French register of trusts) interferes disproportionately with the citizen's right to respect for his private life, as guaranteed by article 2 of the Declaration of the Rights of Man and of the Citizen of 1789, which still carries constitutional weight in France. The council decided that public access to personal data ought to be justified by reason of 'public interest' and ought to be given 'proportionately,' with that reason in mind.

The council held that the second paragraph of article 1649 AB of the French general tax code was unconstitutional with immediate effect, stating that the legislature "did not limit the circle of persons having access to data from the register which represents a manifestly disproportionate interference in the light of the objective against tax evasion and great economic and social delinquency." Therefore, essentially, the French Register of Trusts was unconstitutional because its access was not sufficiently restricted.

In its commentary, the Constitutional Council noted previous decisions in support of its ruling, all of which made it clear that a disproportionate public access to the Register of Trusts was unconstitutional. It invoked the following.

• Decision No 2013-684 DC, involving the identification of (amongst others) life insurance contracts. Here, the council held that Parliament should "ensure the conciliation" between the fight against tax evasion, which is a constitutional objective, and, secondly, respect for other constitutionally protected rights and freedoms, including the right to respect for private life. The council continued that the legislature could not "deprive legal safeguards of constitutional requirements."
• Decision No 2014-690 DC, involving the creation of France's national register of loans to individuals. Here, the council held that the legislature had not limited the number of persons allowed to consult the register. In view of the nature of the data and the frequency of its use, it thought that many people may have access "with insufficient guarantees of protection."

Consequently, on 1st December, article 1649 AB of the French General Tax Code was modified by Ordinance no 2016-1635 to restrict access to the register of trusts so that only 'competent authorities' can have unrestricted access. Such authorities include the national financial intelligence unit, judicial authorities, customs authorities, tax authorities and supervisory authorities (such as the bar association). In addition, the register of trusts will be accessible by people involved in the fight against money laundering and terrorist finance (e.g. banks, accountants, lawyers).  

The amendments to article 1649 AB are similar to parts of the European Union’s Fourth Anti-Money Laundering Directive that dicatate that competent authorities (e.g. branches of government) and obliged entities (e.g. banks) should have access to registers of beneficial ownership information.

However, the modifications to article 1649 AB of the French general tax code do not appear to include access to the register of trusts by members of the public who can "demonstrate a legitimate interest," in line with the stipulations of the EU's directive.

Only after March 2010 have individual citizens who are party to trials or lawsuits been allowed to ask the Constitutional Council to rule on the constitutionality of their cases.

* David Dorgan can be reached on +44 (0)1534 818 060 or at ddorgan@applebyglobal.com