Why French mairies are turning to private firms to recoup property tax

More mairies are hiring private firms to help identify properties where tax declarations have not been submitted correctly.

Even small towns can in some cases recoup up to €800,000 extra per year, allowing them to fund new facilities.

Issues relate to changes to properties that can affect the theoretical rental value (valeur locative cadastrale) that tax offices use to work out local property tax bills, especially taxe d’habitation on second homes or taxe foncière the property owners’ tax.

Another issue can be second homes wrongly declared as ‘vacant’, where correct taxation of the two can differ.

For example in some areas there is no taxe d’habitation on vacant properties and in some there is a right to levy a taxe d’habitation surcharge on second homes.

Examples of problems include where a swimming pool that has not been declared to the tax office has added value to a property which will then not be properly reflected in local tax bills.

Other examples could include undeclared extensions or major renovations that would put the home into a more luxurious category, or even installation of basic utilities such as water and heating into rural homes that did not have them originally.

Main home, second home or vacant

Such works, or the use of a home as main home, second home or vacant (unfurnished and unused) should be notified to the tax office so this can be taken into account.

The form for changes can be found at here.

The biens immobiliers declaration now required of all homeowners should partly help, but will not pick up on everything.

Read more: All owners of French properties must fill in this new tax-site form

In theory tax officials already try to check for fraud and omissions in this area, including, recently, a partnership with Google to analyse data such as swimming pools from aerial images.

However, faced with loss of income from taxe d’habitation on main homes, hundreds of mairies are now paying consultants to search for anomalies.

The Connexion contacted two councils reported to be among those using the services – Santa-Maria-di-Lota in Haute-Corse and Longuyon in Meurthe-et-Moselle – but no one was available to talk to us.

A fiscal expert from the Association des maires du Tarn said: “It is difficult for councillors to discuss because it is not very politically popular, especially in rural communes where everyone knows each other.

“But it helps to update files that are badly filled in and with incorrect identifications.

It is work the tax authorities should in theory be doing but mairies are taking advantage of the chance to use private firms to identify anomalies and incorrect declarations.”

Rare that it would lead to extra fines or payments for past years

It is rare that it would lead to fines or extra payment for past years, she added.

It is usually just a chance to make sure records are up to date and the correct tax is being paid.

The difference in local tax to be paid is rarely enormous, she said.

The situation may be different, however, if major works have not been declared at all, rather than being incorrectly declared.

Some firms ask for a percentage of the extra tax money that is recovered in the first year, but Finindev, one firm that has worked for around 300 communes, charges a flat fee of around €10-20,000 for providing software and undertaking an investigation lasting several weeks or more, depending on the time they will have to spend on the job.

This is usually one-off but can be renewed if councils request this.

Finindev commercial engineer Jérémy Carré said their software can cross-check data relating to different taxes, as well as data from the cadastre land records used for tax purposes.

In other cases issues are spotted by their investigators.

Maps and aerial photos are among the tools used. “For some communes, if they have not done this before, it can be very financially beneficial for them, especially in these times when their tax incomes are relatively limited,” he said.

“Some will gain a lot, others less so.

We’ve had communes of 40,000 inhabitants that were able to recover €500-800,000 a year.”

Whether anything is recovered or not depends on whether the tax office makes use of the data, he added.

Mr Carré said tax offices are often using tools that are “archaic” and so are not able to spot issues as effectively, and they may lack sufficient staff for this work.

Their initiative to work with Google to use aerial images was good, he said, but was something Finindev has already been doing for 10 years, and this (tax office) system “only works with swimming pools”.

Read more: French tax office begins to use aerial shots to find undeclared pools

He added: “I don’t think the councils have much choice but to use such services because their tax incomes are being cut or lowered.

“Now, with inflation and energy prices exploding, they are going to have to find more sources of income to fund their budgets.

That either means raising taxes generally or doing these checks.

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