Social media used in tax residency cases

The issue

Since Johnny Hallyday, the famous French singer, died in 2017, there has been a battle over his £89 million fortune. The argument involves Hallyday’s biological children, Laura Smet, 35, David Hallyday, 52 and their stepmother, Hallyday’s second wife, Laeticia, 44, whom he lived with in Los Angeles prior to his death. In his Will, written in Los Angeles, Hallyday disinherited his biological children, leaving the entirety of his £89 million fortune to his wife, Laeticia. Whilst it is legal to disinherit or omit children from a Will under Californian law, it is illegal to do so in France.

If Hallyday is classed as a full-time American resident, it could be argued that his final wishes should stand as they were completed and made in accordance with the law of the land in which he was a permanent resident. However, his children claim that the singer was a secret resident of France and if this was the case  then the singer’s estate would be covered by French intestacy laws.

 

Instagram as evidence

Hallyday’s Instagram posts found that Hallyday spent 46% or 168 days in France during 2014. In 2015, 41% or 151 days were spent in the country of Hallyday’s birth. Furthermore, in the final eight months of his life, whilst Hallyday fought cancer, his time was spent in France. On the basis of this evidence (which was considered crucial) the Court ruled in favour of Hallyday’s children which means that the estate will be divided under French law.

 

New beneficiaries

Under French law Laeticia will not fare so well. She will now be an equal beneficiary alongside Hallyday’s two biological children and his two adopted children.

 

Inheritance tax

The ruling also means that Hallyday’s estate will suffer a large amount of inheritance tax. This is ironic because Hallyday left France due to crippling tax laws and vowed never to live in France again until the tax laws relinquished its unfair grip on high earners.

 

Final comment

This case is a reminder that the location of internet activity can be tracked and it is something that is likely to be used by international tax authorities more frequently in the future. I would not be surprised to see HMRC seeking to access this kind of information in residence cases. Furthermore, as the electronic record lives on after death, it will be particularly useful in inheritance tax cases. On a practical level, taxpayers with ambiguous residence status may want to cut back on their social media posts!

 

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