Where non-French banks accounts, life assurance policies, capitalisation bonds and wrappers have not been duly reported at least once during the preceding ten years, the French tax administration may request full information and evidence pertaining to these holdings and any associated income or gains. In the absence of a reply within sixty days, the administration may tax these holdings on a mandatory basis and apply a 60% levy which applies to gifts between unrelated individuals.
In July 2020, the Conseil Constitutionnel was asked to examine whether this measure respected the constitution and more importantly, whether it was breaching the principle of equality before tax & public charges. The Conseil recently concluded that the measure was indeed constitutional in that its objective was to combat tax fraud and evasion and that it rationally and objectively treated undeclared holdings as a sum acquired on a gratuitous basis. It was further concluded that, when applying these rules, the administration does not target any particular taxpayers and that anyone faced with such enquiry still has the opportunity to evidence the origins of the funds in question.
Cyril Klajer
cyril.klajer@avocats-bdo.fr