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Les Vieilles Canailles: the producer of Johnny Hallyday rectified by the tax authorities

Remember. In November 2014, Johnny Hallyday, Eddy Mitchell and Jacques Dutronc took to the Bercy stage six nights in a row for a series of concerts entitled The Old Scoundrels. These concerts are produced by Valéry Zeitoun and Pascal Bernardin, via his company Encore Productions, of which he sold 40% just before to the Fimalac group for 3.5 million euros. The judgments obtained by Capital reveal that Encore Productions paid for these six concerts a fee of 1.5 million euros to Johnny Hallyday, who donated 10% to his manager Sébastien Farran. Specifically, the 1.5 million euros were paid to Bornrocker Music Incan American company owned 50/50 by Johnny and Laeticia Hallyday.

The idol of young people had ceded to this company the exclusivity of its rights to its concerts, its derivative products (in particular audiovisual recordings), the rights of its personality, its intellectual property rights, etc. This company is domiciled in the rocker’s house in the Pacific Palisades district of Los Angeles, which he bought in 2010. On this occasion, the owner notably became a US tax resident.

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A long debate with the tax authorities then began to find out whether this stamp should be imposed in France or in the United States. The tax authorities estimated that the whole of the 1.5 million euros should be taxed in France, the tax being deducted before the payment of the fee, and therefore paid by the producers – this is what tax experts call a levy at the source. Bercy relied on the tax code and the Franco-American tax treaty, which stipulate that income from a concert in France must be taxed in France, even if the artist is a foreign tax resident.

But Pierre Pradié, who is both Johnny Hallyday’s and Pascal Bernardin’s tax lawyer, had a different reading. According to him, 40% of the stamp – or 600,000 euros – should not be taxed in France, but in the United States. He believed that this 40% corresponded to the rocker’s image rights and producer rights, because the American company Bornrocker Music Inc was the show’s executive producer.

The tax authorities, after reviewing the contract signed by Johnny, formed the opposite opinion. Indeed, the contract stipulated that the production and production costs were the responsibility of Valery Zeitoun and Pascal Bernardin, and did not entrust any delegated production mission to the American company. Bornrocker Music Inc. The contract even stated: “all payments will be subject to a withholding tax”. The tax authorities also considered that Johnny Hallyday’s image rights and producer rights could not be separated from his performance on stage, which is taxed in France.

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Bercy therefore concluded that Pascal Bernardin’s Encore Productions company should have paid taxes on the 600,000 euros before paying it to Johnny Hallyday. The tax authorities therefore imposed an adjustment of 244,000 euros in 2017, revised the following year to 173,958 euros. The addition notably includes penalties of 40% for “deliberate failure”.

Dissatisfied, Pascal Bernardin challenged the recovery before the administrative court, which dismissed it in 2019. For the judges, “since the sum of 1.5 million euros constituted the consideration for the artistic services carried out in France by M Hallyday, and that the contract signed with the company Bornrocker Music Inc stipulated that all payments would be subject to a withholding tax, Pascal Bernardin’s company Encore Productions could not have been unaware that the amount to be declared was 1.5 million euros”.

But Pascal Bernardin did not drop the case, and appealed, again in vain. The administrative court of appeal dismissed it a year ago, saying: “the tax authorities provide proof of the deliberate intention of Pascal Bernardin’s company Encore Productions to evade payment of the withholding tax. ”.

Tenacious, Pascal Bernardin appealed to the Council of State, which dismissed him on July 5. For the high court, “Pascal Bernardin’s Encore Productions company could not ignore the full amount it had paid to bornrocker had been in return for an artistic service carried out in France by Mr. Hallyday, and was therefore taxable in France”.

Contacted, Pascal Bernardin’s lawyer, Pierre Pradié, declined to comment.

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