Italian government denies French PM Bayrou's 'unfounded' tax dumping claims

The French Prime Minister, Francois Bayrou, accused Italy of pursuing a policy of "fiscal dumping", just days before the vote of confidence in his government scheduled for 8 September, and following accusations made against President Macron by Italian Deputy Prime Minister Matteo Salvini.

Fiscal dumping is a term used to describe the act of creating more favourable conditions, or lowering taxes, to attract foreign business or investment in some countries, in comparison to others.

During a media briefing on Sunday with Franceinfo, LCI, BFMTV and CNews, the French PM pointed the finger at so-called "fiscal nomadism", underlining how public debt in France has grown and lashing out at "money destined for foreign economic actors."

As a positive example, Bayrou cited Japan, where "the debt is 99% held by the Japanese", directing a harsh accusation at Italy. Measures aimed at "the richest" could push taxpayers to move their tax residence to where it is more convenient, he said.

"By now there is a kind of fiscal nomadism and one moves where it is convenient," the French PM added.

Bayrou's claims 'unfounded'

In a note on Sunday evening, the Italian government stressed that the Italian economy is "competitive and stable, with no unjustified tax favour policies to attract foreign companies."

The note points out that Italy too suffers the impact of so-called "European tax havens", which siphon off important resources from the public coffers.

The Italian government branded Bayrou's statements as "unfounded" and called on France to collaborate at the European level against member states that practice tax dumping.

For Italian Prime Minister Giorgia Meloni in particular, what her French colleague said is astonishing.

"French Prime Minister Francois Bayrou's completely unfounded claims that Italy is engaging in "tax dumping," penalising France, are astonishing," she wrote in a post on X.

Italian Foreign Minister Antonio Tajani, interviewed by the daily newspaper Il Messaggero, called Bayrou's words 'astonishing' and the result of faulty reasoning.

"Italy maintains a relevant political and economic solidity, without practising fiscal dumping and without conspiring against other European countries," explained the deputy prime minister and foreign minister.

Tajani — who leads of Forza Italia (FI), one of the three main parties in the ruling coalition — recalled that there are real tax havens in Europe and other anomalies to be corrected, but Italy is not one of them.

The president of the FI senators, Maurizio Gasparri, demanded an apology from Bayrou.

"Large Italian industrial groups have legal or tax headquarters in Holland, Luxembourg and the United Kingdom, which is no longer part of the EU. This shows how pro-Europeanism, often presented as a solution, can become a problem,' Marco Osnato, president of the Finance Committee at the Chamber of Deputies and deputy of Meloni's Brothers of Italy party (FdI), told Adnkronos.

Salvini's party Lega also took a stand, calling Bayrou's words "a serious and unacceptable attack on Italy, its entrepreneurs and workers."

In a note, the party pointed out that France is in the midst of a political crisis, following the recent controversy sparked by Salvini.

Bayrou is holding a series of consultations this week ahead of the vote that could see the fall of his government, continuing the institutional crisis in France initiated by the double round of snap elections one year ago.