Declaration of Accounts and Life Insurance Policies
Individuals, associations and non-commercial companies domiciled or established in France must declare, at the same time as their income or profit returns, the details of the financial accounts they have opened, held, used or closed abroad.
The law of 23 October 2018 extended the obligation to accounts merely held abroad on which no transactions have been carried out (inactive or dormant accounts).
The decree of 26 December 2018 set the entry into force of the new obligation at 1 January 2019.
Each account must be the subject of a separate declaration (made on form no. 3916 or on plain paper containing the information required by the form), which our tax law firm can prepare.
Box 8UU of return 2042 must also be ticked.
Likewise, individuals domiciled in France for tax purposes who take out capitalisation contracts or similar investments, in particular life insurance contracts, with institutions established outside France are required to declare (now on form no. 3916-3916-bis), at the same time as their income tax return, the details of the contracts or investments, the effective date and term of those contracts or investments, the redemptions or premium payments made during the previous year and, where applicable, the surrender value or the amount of the guaranteed capital, including in the form of an annuity, as at 1 January of the year of the declaration.
Box 8TT of return 2042 must also be ticked.
Our tax law firm can prepare these declarations for you.
Failure to file the declaration has the following consequences:
- the offender is liable to a fixed fine of €1,500 per undeclared account or contract or, where the account or contract is held in a State or territory that has not concluded with France an administrative assistance agreement allowing access to banking information, of €10,000.
However, an 80% surcharge applies to all tax reassessments resulting from the failure to declare accounts and contracts held abroad, to the exclusion of any other surcharge or fixed fine. The amount of this surcharge may not be lower than the amount of the fixed fine that would have been applied had there been no tax reassessments.
- sums, securities or assets transferred abroad or from abroad through undeclared accounts or contracts constitute, unless proven otherwise, taxable income;
- a special statute of limitations for reassessment applies.
Where the declaration obligation has not been complied with at least once in respect of the previous ten years, the tax authorities (administration fiscale) may ask individuals to provide, within sixty days, information or supporting evidence regarding the origin and method of acquisition of the assets held in their concealed accounts or contracts and, in the absence of a reply, issue an ex officio assessment (taxation d'office) of the assets concerned to gift and inheritance tax (droits de mutation à titre gratuit) at the rate of 60%.
In the event of an inadequate reply, the ex officio assessment may only be made if, after formal notice to supplement that reply within a period of thirty days, the request is not complied with.
Financial accounts held abroad that are linked to an account opened in France and intended for online transactions (purchases or sales of goods) do not have to be declared, except those on which receipts from sales exceed €10,000 per year.
An account is deemed to be held abroad where the person subject to the declaration obligation is its holder, joint holder, beneficial owner or economic beneficiary.
The ex officio assessment for failure to reply to a request for information or supporting evidence is implemented on the decision of an official holding at least the rank of divisional inspector, who countersigns the notification of the ex officio assessed tax bases.
Gift and inheritance tax is based on the highest value known to the tax authorities of the assets in the account or contract during the ten years preceding the sending of the request for information or supporting evidence, less the value of the assets whose origin and method of acquisition have been substantiated.
The tax authorities may request the disclosure from third parties of bank account or life insurance statements in respect of which the declaration obligations have not been met, in order to examine those accounts in the context of a simple desk audit.
They may examine, under the same conditions, statements voluntarily sent to them by third parties.
A voluntary regularisation may nevertheless be undertaken, for which the assistance of a tax lawyer appears strongly advisable.
Declaration of Foreign Trusts
The trustee of a trust whose settlor or at least one of whose beneficiaries has their tax domicile in France (as at 1 January), or which includes an asset or right located in France, or where the trustee is itself domiciled in France, is required to declare the creation, modification or termination of the trust, as well as the content of its terms, within one month of the event; our tax law firm can prepare these declarations, which remain highly technical.
The trustee must also declare, no later than 15 June of each year, the market value as at 1 January of the assets, rights and capitalised income making up the trust (wherever those assets and rights are located, in the case of persons domiciled in France, or only those located in France for other persons).
Failure to comply with these declaration obligations is punishable by a fine of €20,000.
However, an 80% surcharge applies to all tax reassessments resulting from the failure to declare assets placed in undeclared trusts, to the exclusion of any other surcharge or fixed fine.
The amount of this surcharge may not be lower than the amount of the fixed fine that would have been applied in the absence of tax reassessments.
The settlor and the beneficiaries subject to the levy are jointly and severally liable with the trustee for payment of this fine. In addition, a special statute of limitations for reassessment applies.
The trustee's annual declaration of the market value of the assets and rights as at 1 January of the year is a condition for the exemption from the levy for persons not liable to the real estate wealth tax (IFI).
The declarations are filed in French on form no. 2181-TRUST1 (event-based declaration) or no. 2181-TRUST2 (annual declaration) and submitted to the tax office for foreign companies (service des impôts des entreprises étrangères).
Our tax law firm can assist you.
