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Does Depardieu herald Russia as a tax haven for Europe?

Fleeing France’s high taxes for Russia’s flat 13 percent rate, the French actor spoke of Russia in glowing terms during a high-profile meeting with Vladimir Putin over the weekend.

French movie star Gerard Depardieu has returned to his native habitat in western Europefollowing a tumultuous Russia visit that has left behind a nation collectively scratching its head over the instinctively authoritarian Vladimir Putin‘s quirky decision to bestow Russian citizenshipupon a cantankerous foreign tax rebel, and the equally odd spectacle of Mr. Depardieu accepting it amid a fusillade of lavish praise for Mr. Putin’s regime.

Most analysts say the event was probably a big domestic propaganda win for Putin, who has been under criticism – even from members of his own government  – for imposing a seemingly vindictive banon US citizens adopting Russian orphans in response to US legislation that targets official Russian human rights abusers.

Some suggest that Depardieu’s move might trigger a wave of wealthy Europeans, disgruntled by ever-higher tax rates, to move to Russia where everybody pays a flat 13 percent income tax.

Such talk is encouraged by news that French actress Brigitte Bardot is also threatening to apply to Putin for a Russian passport, albeit for completely different reasons. Ms. Bardot, an ardent supporter of animal rights, is angry about plans by French authorities to euthanize two circus elephants thought to be carrying tuberculosis.

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“In the West they badly understand the specifics of our tax system. When they do learn about it, you can expect a mass migration of rich Europeans to Russia,” tweeted Deputy Prime Minister Dmitry Rogozin on Saturday.

“If someone like Depardieu wants to be a Russian citizen, that’s good. Putin made a beautiful gesture,” by granting his wish, says Vladimir Zharikhin, deputy director of the the official Institute of the Commonwealth of Independent States in Moscow.

“If rich people want to come here, why not? Plenty of talented Russians, like the tennis playerMaria Sharapova, live in the US but hang on to their Russian passports…. It’s not just about patriotism, but also about money. So, let rich people rush here and pay that 13 percent to the Russian treasury,” he adds.

But Rustam Vakhitov, head of tax practice at the Moscow office of International Tax Associates, a Dutch tax consultancy, says that if things were that simple, rich tax evaders would have been flocking to Russia since the flat tax was initiated about a decade ago.

“In principle it’s possible that rich Europeans could manage to maintain residency in Russia,” by utilizing loopholes to get around the six-month-per-year residency requirement to be eligible for the 13 percent rate, he says.

“But they’d have to spend a few months here. In practice, the number of Europeans who’d be willing to come and live in Russia is probably quite limited,” by a variety of factors, including distance from Europe, lifestyle and language, he says.

“Some may come here. I’m not saying Russia’s a bad place, but there are other countries that probably offer better terms,” for wealthy tax fugitives, he adds.

Depardieu was shown over the weekend on Russian TV bearhugging and dining with a smiling Putin in the Kremlin leader’s palatial Black Sea dacha in Sochi, where the 2014 Winter Olympic Games are slated to take place.

Later Depardieu visited the deep-Russian republic ofMordovia, where (perhaps not coincidentally) one of the members of the punk rock band Pussy Riot, Nadezhda Tolokonnikova, is serving her two-year sentence in one of the region’s notorious penal colonies.

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Mordovian officials greeted Depardieu like a visiting hero. Russian media reported that the French actor, who is planning to star in a film about the 18th century Russian peasant revolutionary Emilian Pugachov, was given a free apartment and offered the job of culture minister of the small, ethnic Volga River region.

And in a widely quoted open letter to Russian journalists, Depardieu declared that Putin’s Russia is a “great democracy…. I love your President Vladimir Putin, and the feeling is mutual.”

“I adore your culture, your intelligence. My father was a communist, listening to Radio Moscow! This is also my culture,” he wrote.

“In Russia, there is a good life. Not necessarily in Moscow, which is too big a metropolis for me. I prefer the countryside, and I know wonderful places in Russia…. I like the press, but it is also very annoying because there is too often a single thought. Out of respect for your president and your great country, I have nothing to add,” Depardieu wrote.

No opinion polls have yet detailed the Russian public’s response to all this, but veteran pollster Alexei Grazhdankin, deputy director of the independent Levada Center in Moscow, says it will probably be mostly positive.

“We don’t yet know how the population feels about this move of Putin’s, but I believe the approval will be higher than the level of disapproval,” Mr. Grazhdankin says. “Putin is a figure who crystallizes positive and negative attitudes.”

Dmitri Oreshkin, head of the Mercator Group, a Moscow-based political consultancy, says the Depardieu visit to Russia, with its colorful political overtones, is a throwback to Soviet practices. Shortly after the Bolshevik Revolution, nearly a century ago, leading Western intellectual lights such as H.G. WellsBertrand Russell and George Bernard Shaw visited Russia, and brought back a largely sympathetic image of the new revolutionary state. Muckraking US journalist Lincoln Steffans famously returned from a trip to Soviet Russia declaring, “I have seen the future, and it works.”

“This is a PR exercise, not too different from Putin’s flight with the birds last September,” aimed at countering negative views of Russia under his leadership, says Mr. Oreshkin.

“I recall in the 1980s the Soviet leadership gave Soviet citizenship and a Moscow apartment to a defecting American scientist, Arnold Lokshin,” who claimed to be persecuted in the United States.

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“Where is Lokshin now? I’m pretty sure Depardieu isn’t going to want to come and live here, and this whole foolish business will blow over after a while,” he adds.