Anti-fraud inspections lead to record repayments in France

Tax and social security inspections of French businesses in 2024 saw a record €16.7billion of fraud detected – and another record of €11.4billion of back tax payments.

Builders were singled out as among the worst offenders for social security fraud.

Urssaf, the organisation responsible for collecting social security contributions in France, said its inspectors had recovered €1.6billion of underpayments, with the building industry alone responsible for €1billion.

It said “classic” inspections of company books usually led to around 80% of the underpayments being collected, but when controls included le travail dissimulé, the official term for work done ‘au black’ or off the books, only 2% of detected fraud was repaid.

Estimates from Urssaf are that around 2% of workers are kept off the books, leading to a loss of between €6billion and €7.8billion for state finances.

'Deliberate' and 'well-organised'

And it said the fraud was often deliberate and well-organised.

“We have seen a trend for people who commit fraud to be organised so the companies they work for suddenly disappear and when we do catch them there are no assets,” the head of Urssaf, Damien Ientile told Agence France-Presse.

“Sometimes these companies are set up as units of other companies or, increasingly, based in foreign countries.”

Details of the most common taxes and contributions in fraud attempts were not given.

In 2024 some 760 new tax inspectors were recruited as part of a government promise to have 1,500 new agents by 2027.

Better performance

The president of the Fédération Nationale des auto-entrepreneurs et microentrepreneurs (FNAE), Gregoire Leclercq, said his impression was that Urssaf was becoming “more thorough” when it came to inspecting companies.

“They arrive with more data and are able to cross reference between government departments more than they did before. And they are using tools to detect fraud which show much better performance than those they used before,” he said.

Another Urssaf official, Emmanuel Dellacherie, confirmed this. 

“We have improved our targeting of fraud, but also carry out random inspections which give us a good picture of the levels of underlying fraud.”

Urssaf has a target of recouping €5.5billion in fraudulent underpayments during the period 2023-2027.

Similar modern tools were used by tax inspectors, with the minister for public accounts, Amélie de Montchalin, saying data mining techniques had accounted for €2.5billion of the money recovered by the government.

Read more: How to make a first online income tax declaration in France

The most high-profile use so far of data mining has been comparing satellite photographs of swimming pools with tax records to find undeclared pools.

Ms de Montchalin said the government’s efforts had led to a doubling in the amount of tax and social security fraud detected in the last five years, adding that the objective was to make sure this doubled again in the next five years.

Methods to achieve this will include better controls on VAT payments when goods are imported, especially in small packets, from outside the EU.

And, since February, tax inspectors are able to use a contrôle flash whereby businesses and individuals suspected of fraud are given one month to provide missing documents or see tax credits or tax reductions withdrawn.