For Which Foreign Accounts Do You Have to Pay Tax?

In recent years, the public authorities have introduced new provisions concerning the rules for declaring income and accounts held abroad that are in principle taxable in France. Faced with these various changes, taxpayers sometimes feel lost.

Indeed, it sometimes happens that box 8 UU of their income tax return (form no. 2042) has already been ticked by the tax authorities. It may then be useful to check whether or not one holds an account with an institution located abroad.

Accounts opened in another country, even through a branch in France or online, must in principle, save for exceptions, be declared every year on form no. 3916. Before taking any step, it may be useful to find out, ideally from a lawyer, which types of accounts are to be declared and which foreign income is taxable in France.

To make accounts opened abroad easier to identify, several States have ratified an agreement on the automated exchange of banking data. Since the signing of this agreement in October 2014 (first automatic exchanges in September 2017), tax authorities have been able to easily access the banking information available in the States that have signed this agreement. The French tax authorities now have the means to better monitor accounts opened abroad by tax residents of France.

Reporting obligation: which accounts abroad are concerned?

The obligation for French tax residents to declare foreign accounts has existed for a long time.

This obligation also covers, as a general rule, inactive accounts, that is to say even where no transaction has been carried out on the account during the year. It applies in principle to the account holder, joint holders, the person holding a power of attorney and the beneficial owner of the foreign account.

Foreign investments, capitalisation contracts, life insurance contracts and savings products are also, in principle, among the accounts to be declared. The return states in particular the following information: the account or contract number, the name and address of the institution with which the account was opened or the contract taken out, and the dates of opening and, where applicable, of closure of the account or termination of the contract.

Failure to declare accounts held abroad is penalised: the fine incurred is in principle €1,500 per account and per year, and may in certain cases be increased to €10,000 per account and per year.

Today, with the growth of neobanks and of foreign institutions offering online account opening, it is not uncommon for taxpayers to be unaware that they have opened an account abroad. Accounts opened, held, used or closed with Bunq, N26, Revolut or Monese, for example, are thus in principle, depending on the case, to be declared together with the annual income: an account opened, held, used or closed during a year in principle appears on the return for that year’s income, filed in the spring of the following year (for example, the return filed in 2026 for an account opened in 2025).

Note: PayPal-type accounts are also, in principle, among the accounts abroad to be declared, as the institution is located in Luxembourg. However, the tax authorities provide for a reporting exemption where the following three cumulative conditions are met:

• the account is used only to pay for online purchases and to collect receipts from the sale of goods;
• it is linked to another account opened in France;
• total receipts for the year do not exceed €10,000.

Digital asset accounts (cryptocurrencies) opened, held, used or closed with institutions located abroad must in principle be declared on form no. 3916-bis. This form states in particular the account name, the name and address of the institution, the account number and characteristics, and the dates of opening and, where applicable, of closure.

How accounts abroad are taxed

Not all declared foreign accounts are taxed as such: it is the income they produce that may be taxed, such as dividends, capital gains, interest and foreign-source rents. There are other, less common types of taxable income; a tax lawyer can help identify them, in particular in the light of the tax treaty between France and the other State.

Income from foreign bank accounts is in principle declared, in particular, on forms no. 2047 and/or no. 2074. Form 2074 is used to calculate the capital gains and losses for the year, in order to determine the overall result (net gain or net loss) before the tax is calculated.

How to regularise your situation if you failed to declare an account abroad in the past?

Putting together a regularisation file is in most cases a cumbersome and technical process. Various points must be examined, in particular which taxes to regularise (income tax, if income has been received? Wealth tax (ISF) / property wealth tax (IFI) if the assets exceed the taxation threshold? Gift and/or inheritance duties? etc.). The period over which to regularise is also one of the key points, since this period depends on the tax concerned but also on the total balance of the foreign accounts.

The taxation rules applicable to the regularisation vary according to the amounts in the account abroad:

• If the total credit balances of the accounts did not exceed €50,000 at any time during the year, the reassessment period is in principle 3 years for income tax. It is in principle 10 years otherwise.
• For ISF or IFI purposes, the duties reassessed on undeclared assets held abroad may in principle carry an 80% surcharge. In the case of a spontaneous regularisation, the penalties may, depending on the case, be reduced.
• In the case of accounts with assets of several million euros, an error or failure to declare may lead to heavy penalties and possibly also criminal penalties in the event of a tax audit. Thanks to voluntary regularisation, penalties may, depending on the case, be significantly reduced.

The means available to the tax authorities to detect accounts held abroad are now much more effective. Compliance with the obligations to declare accounts abroad and to pay tax is therefore all the more important.

Where accounts opened abroad have not been declared with the annual income, it is advisable to consult a tax lawyer to analyse the situation: depending on the case, a regularisation carried out in the best conditions may be an appropriate solution, as a tax reassessment often has heavier consequences.

Where the regularisation is made spontaneously, the tax authorities may take this into account and the penalties may, depending on the case, be reduced. The amount of the fines depends in particular on the number of years not declared. Using a tax lawyer can be helpful for these steps, which are technical and require a file that takes time to put together.

What happens if no regularisation of the declaration is carried out?

If foreign accounts are neither declared nor regularised, the tax authorities may obtain the corresponding banking information, in particular through the agreements on the automatic exchange of information. Most often, the taxpayer then receives a request for explanations and justifications, with a deadline for replying; a precise and clear answer is in principle expected. The tax authorities may also open a tax audit, which is much more intrusive and lengthy than a request for justifications.

Complying with the response deadline set by the competent authorities is important: a precise, truthful and exhaustive answer, ideally prepared with your lawyer, may limit the risk of a tax audit. Failing any response to this request for explanations, a tax audit, a procedure that is both burdensome and intrusive, becomes more likely.

If the origin and terms of acquisition of the assets are not justified in response to the request provided for by law (article L23 C of the French tax procedure code), these assets may in principle be subject to gift and inheritance duties at the rate of 60% (article 755 of the CGI), plus, depending on the case, late-payment interest; the specific 80% surcharge for undeclared accounts (article 1729-0 A of the CGI) does not in principle apply to these duties. When a request for information is received, it is advisable to consult a lawyer to analyse the situation: depending on the case, a regularisation at that stage may help to mitigate the penalties.

The regularisation file in principle brings together the relevant supporting documents; the documents requested by the tax authorities are in principle sent to the department that made the request. Once the regularisation has been completed, the taxpayer in principle remains required, every year, to declare their foreign accounts with their income tax return. The relevant forms include: no. 3916 (or 3916-bis for digital asset accounts), no. 2047 for foreign income, no. 2074 for capital gains, and the no. 2042 return, or even 2042-C.

Failure to declare accounts abroad: liable to tax and criminal penalties

In the event of an oversight or error, failing to declare an account abroad in principle exposes the taxpayer to a fine of €1,500 per account and per year. This fine is in principle time-barred at the end of the fourth year following the year in which the omission was committed (article L188 of the French tax procedure code): for an account that has never been declared, it may therefore cover, depending on the date of the audit, 4 or 5 returns, i.e. €6,000 or €7,500 per account.

If the taxpayer holds several accounts, the amount of fines may ultimately be high. Moreover, this fine may in certain cases be increased to €10,000 instead of €1,500. For undeclared accounts abroad opened, held, used or closed in a country that has not signed a convention with France facilitating access to banking data, the fine may indeed amount to €10,000 per account, per year.

Thus, a taxpayer who holds accounts abroad or life insurance contracts taken out with foreign institutions is in principle subject to the reporting obligations provided for by law. In the event of an oversight, it is advisable to consult a tax lawyer to assess the situation and the possible courses of action.

FAQ

Read more

• Which Foreign Bank Accounts Must Be Declared in France?
• Form 3916: how to declare a foreign account, step by step
• What Fines Apply for Failing to Declare an Account Abroad?
• Undeclared Foreign Account: Limitation Periods
• Undeclared Revolut, N26, eToro, Wise or Degiro Account: What to Do