To ensure the transition to withholding at source, the tax on “non-exceptional” income received in 2018 (salaries, pensions, rental income, business profits, etc.) was in principle cancelled by a specific tax credit, the CIMR (crédit d’impôt modernisation du recouvrement). This is what was called the “blank year”.
The CIMR is, however, in principle reserved for income declared spontaneously. Taxpayers who did not declare their 2018 income, or declared it late or incompletely, have therefore been refused the CIMR and have been subject to tax reassessments. The question may still arise today, in particular when foreign-source income for 2018 is discovered within the ten-year reassessment period applicable to unreported foreign accounts. Each situation deserves to be analysed with a lawyer.
In brief
- The CIMR in principle cancelled the tax due on non-exceptional 2018 income falling within the scope of withholding at source.
- It in principle applies only to income declared spontaneously: on time, or late but before any reminder from the tax authorities.
- A concession exists for taxpayers acting in good faith who filed after a simple reminder, provided their 2016 and 2017 returns had been filed spontaneously; it does not apply after a formal notice.
- Income revealed after an audit procedure has been opened, including a simple request for clarification or justification, in principle gives no entitlement to the CIMR.
- A refusal of the CIMR may, depending on the case, be challenged; the chances of success depend on the precise circumstances in which the return was filed.
Contents
What is the CIMR?
Withholding at source came into force on 1 January 2019. To prevent taxpayers from paying in 2019 both the tax on their 2018 income and the withholding on their 2019 income, the law introduced the CIMR (article 60 of the Finance Act for 2017). It in principle cancels the tax on non-exceptional 2018 income within the scope of withholding at source: salaries, pensions, rental income, profits of the self-employed, including where such income is foreign-source and taxable in France.
Exceptional income (for example non-recurring bonuses or the taxable part of employment termination payments) and income outside the scope of withholding at source, such as most investment income and capital gains, in principle remained taxed under the usual rules. As a general rule, 2018 income still had to be declared in spring 2019.
Why is the CIMR in principle refused in the event of late filing?
The CIMR is in principle limited to income declared spontaneously. The table below summarises the main situations, as presented by the tax authorities:
| Situation | CIMR in principle |
|---|---|
| 2018 income tax return filed within the legal deadline | Granted |
| Return filed late, but before any reminder from the tax authorities | Granted |
| Amended return filed spontaneously to correct a return that was itself filed spontaneously | Granted for the corrected income |
| Return filed after a simple reminder (email or form no. 2110-SD), by a taxpayer who filed their 2016 and 2017 returns spontaneously | Granted by concession |
| Return filed after a formal notice | Refused |
| Income revealed after an audit procedure has been opened, including a request for clarification or justification | Refused |
Where the CIMR is refused, tax on the 2018 income concerned is due, with, depending on the case, late-payment interest and the applicable surcharges. The reassessment period for 2018 income tax had also been extended to four years, until 31 December 2022, to allow the CIMR to be checked.
The case of 2018 foreign income
The ordinary reassessment period for 2018 income has expired, but it is in principle extended to ten years for income linked to unreported foreign accounts, subject to exceptions. Foreign-source 2018 income within the scope of withholding at source, for example rent from a property located abroad paid into an unreported account, may therefore still be reassessed. In that case, the conditions in which it is declared in principle determine whether the CIMR can apply: a spontaneous regularisation, before any action by the tax authorities, does not have the same effects as a return filed after a request for justification. Whether and when to proceed with a regularisation therefore deserves to be examined with a lawyer.
How can a refusal of the CIMR be challenged?
A refusal of the CIMR may, depending on the case, be disputed in the reply to the proposed reassessment, or challenged through a formal tax claim (réclamation contentieuse) sent to the tax authorities after the tax has been assessed for collection. The arguments depend on the precise circumstances: date on which the return was filed, existence and nature of a reminder, filing record for 2016 and 2017, whether the income is exceptional, spontaneous nature of an amended return.
The time limits for acting are in principle restricted; a prompt analysis of the situation with a lawyer generally makes it possible to determine whether a challenge can be considered.
FAQ
What is the “blank year”?
It is the expression used for the cancellation, through the CIMR, of the tax on non-exceptional 2018 income when withholding at source was introduced. 2018 income nevertheless, in principle, had to be declared.
Does the CIMR apply if the 2018 return was filed late?
In principle yes if it was filed before any reminder from the tax authorities. After a simple reminder, a concession exists under conditions; after a formal notice or the opening of an audit, the CIMR is in principle refused.
Could 2018 foreign income benefit from the CIMR?
Yes, in principle, where it fell within the scope of withholding at source and was taxable in France, for example foreign rental income or a salary paid by a foreign employer, provided it was declared spontaneously.
Were 2018 dividends and interest covered by the CIMR?
In principle no: investment income and capital gains were outside the scope of withholding at source and remained taxable under the usual rules.
Can a refusal of the CIMR still be challenged?
That depends on the time limits applicable to each situation, in particular the claim period following the assessment for collection. An analysis with a lawyer makes it possible to check whether a challenge is still possible.
