The number of returns to be checked leads the French tax authorities to diversify their action and choose between a summary check, conducted from their offices, and an in-depth audit. The summary check generally precedes the in-depth audit: it covers a large number of files and may lead, for some of them, to a more thorough examination.
This article presents these different forms of audit, their characteristics and the safeguards that accompany them. Depending on the form of audit and what is at stake, the assistance of a lawyer may be useful from the start of the procedure.
In brief
- The formal check corrects obvious clerical errors in returns.
- The desk audit, conducted from the tax office, checks the consistency of returns and may give rise to requests for information or justification.
- In-depth audits are the business tax audit and the remote examination of accounts for businesses, and the review of the personal tax situation (ESFP) for individuals.
- In-depth audits are in principle announced by a prior notice and governed by safeguards, in particular the right to be assisted by an adviser.
- The ESFP in principle lasts no more than one year and may concern a non-resident taxable in France.
The summary check
The summary check is carried out without travel: it takes place in the officer’s office, on the basis of the taxpayer’s file. Its scope varies, which leads to a distinction between the formal check and the desk audit.
The formal check
The formal check consists in correcting obvious clerical errors found in returns. It does not concern the accuracy of the data declared, but only the way in which they are presented: for income tax, it is essentially limited to checking the boxes completed and the documents attached.
The desk audit
The desk audit is more comprehensive: the items in the return are compared with all the information and documents held by the tax authorities. Given the number of taxpayers, it is selective: all returns may be checked, but each year only some of them are, chosen on the basis of indicators or because of their importance.
Conducted from the tax office, it may lead the tax authorities to send the taxpayer requests for information, clarification or justification. How it unfolds is detailed in the article on the desk audit.
The in-depth audit
The in-depth audit consists in ensuring that returns are truthful by comparing them with external information. It may concern all taxes: there is, for example, a check of registration duties relating to the declared value of the assets transferred.
Certain procedures require close cooperation from the taxpayer: these are referred to as audits (vérifications). Their more intrusive nature explains the formalities surrounding them, for the benefit of the taxpayers audited. For businesses, these are the business tax audit and the remote examination of accounts; for individuals, the review of the personal tax situation (examen contradictoire de la situation fiscale personnelle, ESFP).
The business tax audit
The business tax audit covers all the accounting entries of a sole proprietorship or a company, compared with other data to ensure that the returns are accurate. It in principle takes place at the business’s premises and may concern tax on profits, VAT or other taxes, or be limited to one of them. Its stages are detailed in the article on the business tax audit.
It begins with an audit notice, which specifies in particular the taxes and period being audited and the identity of the auditor, and states that the Charter of the rights and obligations of the audited taxpayer can be consulted online and provided on simple request. Depending on the size of the business, the audit is entrusted to a departmental team, to an interregional tax audit directorate (Dircofi) or, for the largest businesses, to the national and international audit directorate (DVNI).
The remote examination of accounts
The remote examination of accounts (examen de comptabilité) is an in-depth audit carried out remotely, on the basis of the accounting entries files sent by the business, without any visit to its premises. It is also announced by a prior notice, and the tax authorities in principle have six months from receipt of the files to send a reassessment proposal or inform the business that there will be no adjustment. It is presented in the article on the remote examination of accounts.
The review of the personal tax situation (ESFP)
The ESFP aims to check the consistency between the income declared by an individual and his or her actual financial situation: assets, cash and lifestyle. It may concern residents of France, but also non-residents subject to income tax in France. Relatively rare compared with the number of taxpayers, it often follows anomalies found during a desk audit or information provided by third parties.
The procedure begins with a notice of examination, which states the years audited and specifies that the examination may in principle not exceed one year. A meeting is then organised at the tax authorities’ premises, which the taxpayer may attend with an adviser of his or her choice, for example a lawyer. He or she may in particular be asked to present:
- the list of his or her bank accounts in France and abroad;
- his or her bank statements;
- information showing his or her assets;
- the list of his or her movable and immovable property.
Further information may be requested throughout the procedure, which often lasts several months and involves several meetings. The assistance of a lawyer from the outset generally makes it possible to assert the taxpayer’s rights while maintaining good cooperation with the tax authorities, which may limit the risk of adjustments or of an ex officio assessment. How an ESFP unfolds is detailed in the article on tax audits of individuals.
The forms of audit at a glance
| Form of audit | Place | Taxpayers concerned | Prior notice | Duration |
|---|---|---|---|---|
| Formal check | Tax office | All | No | Short |
| Desk audit | Tax office | Individuals and businesses | No | Variable |
| Remote examination of accounts | Remotely, based on the accounting files | Businesses | Yes | In principle six months from receipt of the files |
| Business tax audit | Business premises, in principle | Businesses | As a general rule, yes | No more than three months in principle for small businesses; no legal limit for others |
| ESFP | Tax authorities’ premises | Individuals | Yes | No more than one year in principle |
FAQ
What is the most common form of audit?
The desk audit, conducted from the tax office on the basis of the returns and the information the tax authorities hold. In-depth audits are proportionally rarer.
Can a non-resident be subject to a review of the personal tax situation?
Yes, in principle, as long as he or she is subject to income tax in France, for example on French-source income.
How long does a review of the personal tax situation last?
In principle no more than one year from receipt of the notice of examination, subject to exceptions provided for by law. The taxpayer may be assisted by an adviser of his or her choice throughout the procedure.
