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Common issues whilst paying taxes in France

Tax declarations are now, hopefully, just a fading memory, with the relief you will not have to consider them again until next May. Sadly, many people are dealing with problems from confusing elements of the declaration, such as social charges that should not have been taken.

An increasingly common issue is the declaration of foreign bank accounts (any account outside of France). Here, this refers not to income from accounts, but merely the fact of holding an account of any kind, bank account or otherwise.

This is important, as the penalty is €1,500 per undeclared account, rising to €10,000 where the account is held in a territory with no administrative agreement with France. In addition, an account that is reported but with inaccuracies and / or omissions, will incur a penalty of €150.

You may be reading this feeling very comfortable having declared all of your ‘bank’ accounts.

Does this mean only bank accounts, so specifically a banking institution?

The tax code specifies ‘comptes de toute nature’ i.e. any nature of account. It does not matter how it is held, so any kind of establishment, personally or company owned, owned directly or as the account manager.

This is quite a catch-all, so our view is that anything that can hold money should be declared.

This is logical when we look at what the law is designed to achieve. French tax authorities do not want people hiding money, demanding that residents be open and honest on fiscal dealings, with punitive measures for those who are not.

I am not going to attempt an exhaustive list; but consider your foreign Paypal account, your stockbroker’s trading account, your betting shop account, a catalogue account... Do you have a currency trading account, maybe with a card attached to it; even an account number (services like smartphone app Revolut, for example)?

If these are not in France, these are places where you can hold money, so tax authorities see them as possible places to conceal money.

What information needs to be declared?

If you complete the relevant tax form, N° 3916, then this is evident, but you can also make a separate paper declaration. The law asks for the name and address of the managing institution, its nature / type / characteristic, the date of opening / closing or changing of the account.

How often do accounts need to be declared?

This is not absolutely clear. The N° 3916 notice (notes) can be read as saying that only the opening of accounts, closure of accounts and any kind of modification of account information is needed.

There are also several articles of law on declaration of accounts open, closed or modified, so is it just opening them? The answer is no.

The law says: “Individuals, associations, companies not having a commercial form, domiciled or established in France are required to report, along with their tax returns or results, particulars of accounts opened, used or closed abroad.” (So new residents must declare everything.)

The word ‘used’ is why we recommend all foreign based accounts are declared every year. An account with only £0.01 has arguably been used.

We advise not taking chances, or risking that you could win the argument on the definition. It will be your local tax inspector’s decision. 

If the account has seen no activity you may try to contest the fine, but do not expect to win, or gain any friends at the tax office by trying.

People hunting the best rate will open accounts and keep them, jumping in and out, following the best rate, but our advice is to keep it simple. Keep foreign accounts to the minimum as this makes staying within the law much easier.

This column was written by Robert Kent of Kentingtons financial advisers. 

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Income Tax in France 2023 (for 2022 income)*
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