Law relating to prevention of tax fraud and serious economic and financial crimes (n° 2013-1117) was adopted on December 6th, 2013. It was published in the French Official Journal on December 7th, 2013. Measures for which the law do not provide a specific date of entry into force, shall apply from on December 8th, 2013.

The law strengthens the provisions relating to fight against tax fraud, increasing applicable penalties in case of tax fraud, and strengthen French Tax Administration (FTA) and Customs Administration powers.

The law notably contains:

Taxpayers reporting obligations:

  • Companies must give to the FTA a light-weight version of their transfer pricing documentation within 6 months following the filing date of companies’ income tax returns.

  • For wealth tax due for 2014, the applicable penalty in case of assets declaration following the revelation of foreign assets is increased from 10% to 40%. 

  • Trusts administrators’ declarative obligations and penalties are strengthened, €20 000 or if higher, 12,5% of the goods, or products included in the trust.

  • The failure to reply to a formal notice concerning tax reporting for companies subject to Section 209 of the French Tax Code, leads to a €1 500 penalty for each failure or a 40% penalty if this last amount is superior.

  • In case of failure to reply to a formal notice concerning tax reporting of their shareholders and subsidiaries, companies shall be subject to a €1 500 penalty or a 10% penalty if the latest amount is superior. 
Criminal proceedings for tax fraud:
  • Aggravating circumstances are extended in case of tax fraud committed by an organized group. Hence, the penalty is now €2 000 000 and 7 years imprisonment, without any distinction between aggravating circumstances. 

  • Creation of a “repentant status” which can lead to a decrease of the applicable penalty in case of tax fraud.

  • The statute of limitation of the crime of tax fraud is increased from 3 to 6 years.
FTA communication:
  • Designers and editors of accounting software should declare to the FTA all documents relating to the software. If the software they distribute permits the concealment of revenues, they should be subject to a 15% penalty of the turnover which comes from the commercialization of this kind of software.

  • The FTA can examine bank and life-insurance foreign account, spontaneously communicated by a third-party. 
Deadline for international administrative assistance:
  • The FTA deadline and scope in case of international administrative assistance, are increased to 3 additional years and is now of 8 years. 
Tax inspection:
  • The FTA deadline during a tax audit (“vérification de comptabilité”) could be extended to more than 3 months if the taxpayer was involved in conceal activities.

  • The FTA inspectors are authorized to copy some computerized accounting documents, in case of an unannounced inspection, to prevent the disappearance of data. 
Tax recovery:
  • The statute of limitation of legal recovery action is increased to 6 years when the taxpayer is established in a foreign or non-EU country. 
Other measures:
  • The law introduces protecting measures prohibiting any penalties, dismissal or discriminatory measures against an employee who has witnessed about an offence or a crime he learned during his functions.

  • Possibility for recognized associations promoting prevention against corruption since at least five years, to act as a civil party in matters of lack of probity, corruption, insider influence, and laundering of said offences and electoral bribery.