Whether you are an individual, an association or a company that does not have a commercial form, you must declare, at the same time as your income or profit returns, the details of any bank accounts opened abroad.

Each bank account must be the subject of a separate declaration.

Similarly, individuals domiciled in France for tax purposes who take out capitalisation contracts or investments of a similar nature, in particular life insurance contracts, with institutions established outside France are required to declare, on plain paper (or, now, on form no. 3916-3916-bis), at the same time as their income tax return, the references of the contracts or investments, the effective date and term of these contracts or investments, the redemptions or premium payments made during the previous year and, where applicable, the surrender value or the amount of the guaranteed capital, including in the form of an annuity, as at 1 January of the year of the declaration.

Failure to file the declaration has the following consequences:

– the offender is liable to a fixed fine of €1,500 per undeclared account or, where the account or contract is held in a State or territory that has not concluded with France an administrative assistance agreement providing access to banking information, €10,000. However, an 80% surcharge applies to all tax reassessments resulting from the failure to declare accounts and contracts held abroad, to the exclusion of any other surcharge or fixed fine. The amount of this surcharge cannot be less than the amount of the fixed fine that would have been applied in the absence of tax reassessments.

– sums, securities or assets transferred abroad or from abroad through undeclared accounts or contracts constitute, unless proven otherwise, taxable income;

– a special 10-year reassessment period applies: the tax authorities can go back 10 years (unless the total credit balances of the foreign accounts remained below €50,000)

If you have failed to declare your accounts for even one year during the past ten years, the tax authorities (administration fiscale) may ask individuals to provide, within sixty days, information or supporting evidence on the origin and terms of acquisition of the assets held in their concealed accounts or contracts and, failing a response, assess ex officio the assets concerned to gift and inheritance tax (droits de mutation à titre gratuit) at the rate of 60%. This would therefore be disastrous. Avoid getting to that point by contacting a tax lawyer at a very early stage.

In the event of an insufficient response, ex officio assessment (taxation d’office) may only take place if, after formal notice to complete that response within thirty days, the request is not complied with

A FEW CLARIFICATIONS

Financial accounts held abroad that are linked to an account opened in France and used to carry out online transactions (purchases or sales of goods) do not have to be declared, except those on which receipts from sales exceed €10,000 per year.

Ex officio assessment for failure to respond to a request for information or supporting evidence is implemented by decision of an officer holding at least the rank of divisional inspector, who countersigns the notification of the ex officio assessed tax bases. Ex officio assessment has serious consequences, which can very often be avoided. The assistance of a tax lawyer early in the procedure will generally make it possible to avoid reaching that point.

Gift and inheritance tax is assessed on the highest value known to the tax authorities of the assets in the account or contract during the ten years preceding the sending of the request for information or supporting evidence, less the value of the assets whose origin and terms of acquisition have been substantiated.

The tax authorities may request from third parties the bank account or life insurance statements in respect of which the reporting obligations have not been fulfilled, in order to examine these accounts as part of a simple desk audit. They may examine, under the same conditions, statements spontaneously sent to them by third parties.

Individuals who had not declared assets held abroad (bank accounts, life insurance contracts, property or rights held in trust) could benefit, until 31 December 2017, from an administrative voluntary regularisation scheme (STDR) with reduced penalties; since its closure, regularisations are governed by ordinary law, with a settlement (transaction) remaining possible.

CONCLUSION

If you have not declared some of your foreign accounts, you face heavy penalties if they are detected by the tax authorities.

However, there are generally upstream solutions, in particular voluntary regularisation.

As each situation is unique, it is necessary to assess, on a case-by-case basis, which situations clearly require such a procedure to be implemented.

Contact us to review your specific situation.

Contact