J'ai fait appel à Maître Uzan dans le cadre d'une procédure fiscale longue et techniquement complexe. Analyse rigoureuse du dossier, réponses précises dans des délais parfois très courts, et surtout une vraie capacité à maintenir un dialogue constructif avec l'administration plutôt qu'à durcir inutilement les positions.
Il a pris le temps de m'expliquer chaque étape et les options possibles, sans jargon et sans promesses excessives. Le dossier s'est conclu par une issue négociée.
Un accompagnement sérieux, du premier échange jusqu'au suivi complet de l'exécution. Je recommande sans réserve.
Tax Reassessment
By Marc Uzan, French tax lawyer in Paris
Tax Reassessment: Consequences, Penalties and Remedies
Tax lawyer at the Paris Bar since 2008 – exclusive tax law practice, including tax reassessments and tax litigation
In brief
- Response deadline: 30 days from receipt of the NPR (proposed tax reassessment notice) (+ 30 additional days on request).
- Possible penalties: Late-payment interest of 0.20% per month + surcharges of 10%, 40% or 80% depending on the degree of seriousness.
- Reassessment periods: 3 years in principle, 10 years, subject to exceptions, in the case of undisclosed activity or undeclared foreign accounts.
- Tax lawyer: checks that the procedure is lawful, prepares your observations, negotiates or argues your case in court.
What is a proposed tax reassessment and how long do you have to act?
- Mandatory document prior to reassessment: The NPR (notification de proposition de rectification – proposed tax reassessment notice) is sent by registered mail. It details the proposed adjustments, their legal basis and the amount claimed.
- Strict response deadlines: in principle, 30 days to respond, which can be extended once by a further 30 days on simple request. After that period, the taxpayer’s silence in principle amounts to tacit acceptance.
- Broad scope: The NPR may concern income tax, IFI (property wealth tax), VAT or transfer duties.
How to respond to a proposed tax reassessment: 5 steps
- Careful reading of each point, ideally with your lawyer: identification of the adjustments line by line (amount, legal basis).
- Evidence: invoices, contracts, bank statements, correspondence… any document useful for the defence.
- Review of the procedure: delivery of the Taxpayer’s Charter, reasoning compliant with article L.57 of the LPF, compliance with the duration and period of the audit.
- Observations in reply: statement of the facts, legal arguments, supporting evidence and, where appropriate, a request for an extension made within the initial period.
- Sending the response: sending it by registered mail with acknowledgement of receipt makes it possible to keep proof of it; it is useful to keep a paper and digital copy.
What surcharges and interest can be applied and how can they be mitigated?
| Reason | Surcharge | Interest | Reassessment period | Defense strategy |
|---|---|---|---|---|
| Late filing | 10% | 0.20%/month | 3 years | Voluntary payment, request for discretionary remission |
| Bad faith | 40% | 0.20%/month | 3 years | Evidence of an error or an ambiguity |
| Fraudulent maneuvers | 80% | 0.20%/month | 3 years (5 years if a criminal tax fraud complaint is filed; 10 years for an undisclosed activity or undeclared foreign accounts) | Challenge to the classification as fraud or abuse of law |
What is the litigation process if the tax authorities maintain the reassessment?
- Collection: if your observations are rejected, in part or in full, the additional tax is put into collection (tax notice or, for certain taxes, notice of collection – avis de mise en recouvrement, AMR).
- Mandatory prior claim: the assessment is in principle challenged by means of a formal tax claim (réclamation contentieuse), in principle before December 31 of the 2nd year following its collection; after a proposed reassessment, this period can run until December 31 of the 3rd year following its receipt (article R*196-3 of the LPF).
- Silence of the tax authorities = implicit rejection: in principle, after 6 months without a response, the matter may be brought before the administrative court.
- Remedies: in principle, appeal and then an appeal on points of law to the Conseil d’État, each within 2 months of the decision.
- Stay of payment: article L.277 of the LPF in principle makes it possible to suspend payment of the disputed part, although guarantees may be required.
What I see in my cases
What tips the balance in a case is, first, procedural errors, then the merits. In complex cases, particularly in international taxation, it is possible to put the tax authorities in a difficult position on technical points with which they are not very familiar.
Audit teams do not have unlimited resources. From what I observe, only a small proportion of cases, around one in ten, have a truly solid defence, and the tax authorities quite logically concentrate their efforts on the least well-defended cases. A well-argued file, grounded in the legal texts and the supporting documents, can change the course of the discussion. My practice is also geared towards negotiation: around nine cases out of ten are settled directly with the tax authorities, as a general rule within six to twelve months. These are orders of magnitude, which do not prejudge the outcome of a given case.
Why entrust your defense to a tax lawyer from the adversarial phase onwards?
- Detection of procedural defects: a lawyer identifies irregularities (lack of reasoning, missed deadline, charter not provided) that can lead to the reassessment being cancelled.
- Dealings with the tax authorities: depending on the case, they may discuss how the facts are characterised and how surcharges are applied.
- Stay of payment: the lawyer can request a stay of payment and discuss the guarantees requested.
- Litigation: they prepare the file, draft the claim and plead before the court; depending on the case, a settlement (article L.247 of the LPF) may also be sought.
The 8 stages of a tax reassessment
- Audit notice (desk audit or field audit).
- Proposed tax reassessment notice (NPR).
- Adversarial response within 30 days (extendable).
- Response from the tax authorities.
- Collection of the tax (tax assessment notice or AMR).
- Formal claim within the time limits laid down by law.
- Decision of the tax authorities, express or implicit (6 months’ silence).
- Legal action before the administrative court.
FAQ
Why do the tax authorities apply a 40% surcharge for bad faith and how can it be challenged?
The 40% surcharge is provided for by article 1729 of the CGI when it is shown that the taxpayer deliberately evaded tax. It requires deliberate intent, which the tax authorities must prove.
Depending on the case, this surcharge may be challenged, in particular where deliberate intent is not established (good-faith error, interpretation of the tax rules, unintentional oversight). A lawyer’s advice makes it possible to assess the arguments available.
How do I actually request the additional 30-day period to respond to my NPR?
In principle, a written request sent to the tax authorities within the initial 30-day period following receipt of the NPR is sufficient. The request is in principle granted as of right and does not need to be justified. It may be sent by ordinary letter or through the secure messaging service, but sending it by registered mail with acknowledgement of receipt may be useful to keep proof of the request.
This additional period can only be granted once.
What happens if a formal demand for payment is received while a claim is still pending?
Depending on the case, a stay of payment may be requested under article L.277 of the LPF, in principle in the claim. Where it applies, it in principle suspends collection proceedings while the claim is being examined.
Above a certain amount, guarantees (mortgage, surety, etc.) may be requested. If the stay is refused or the guarantees are considered insufficient, the matter may in principle be brought before the judge hearing urgent applications within 15 days (article L.279 of the LPF).
Glossary
- NPR: Notification de Proposition de Rectification (proposed tax reassessment notice)
- AMR: Avis de Mise en Recouvrement (notice of collection)
- LPF: Livre des Procédures Fiscales (French Tax Procedure Code)
- 40% surcharge: penalty for bad faith
- Reassessment period: the period during which the tax authorities can issue a reassessment
Case study
An NPR proposes a reassessment of €250,000 on 2021 income
- The taxpayer in principle has 30 days to respond (or to request an extension).
- The supporting documents are gathered and the observations sent, after the situation has been analysed with a lawyer.
- If the tax authorities maintain the reassessment, the tax is put into collection: a claim may in principle be filed until 31 December of the 2nd year following collection or, if later, until 31 December of the 3rd year following receipt of the proposed reassessment.
- A stay of payment may be requested in the claim.
Further reading
The proposed reassessment must in principle set out the legal and factual grounds for each adjustment envisaged. If the reasoning is incomplete, imprecise or missing, the tax may, depending on the case, be cancelled on procedural grounds.
- Reference: LPF L.57
Article 1729 of the French General Tax Code (Code général des impôts – CGI)
This article sets the rates of surcharges in the event of a failure:
- 10% for late filing (CGI, article 1728)
- 40% in the case of a deliberate failure
- 80% in the event of fraudulent maneuvers or abuse of law
The burden of proof lies with the tax authorities for the heaviest penalties.
- Reference: CGI art. 1728 and 1729 – BOFiP BOI-CF-INF-10-20-10 and BOI-CF-INF-10-20-20
