Businesses and their executives may spontaneously regularise certain irregularities with the business tax compliance department (service de mise en conformité fiscale des entreprises), provided that no tax, administrative or judicial proceedings are under way.
Our tax law firm can handle this procedure in your name and on your behalf.
A new regularisation desk: the Smec
The business tax compliance department (service de mise en conformité fiscale des entreprises, Smec) allows businesses and their executives to spontaneously bring their tax situation into compliance in return for reduced penalties according to a scale, provided that no tax, administrative or judicial proceedings are under way.
Requests may concern (exhaustive list):
- all tax irregularities discovered upon the takeover of a business (whether discovered before or after the takeover),
- certain international tax issues (failure to declare a permanent establishment, deduction of all or part of a loan granted by a foreign company, unlawful or abusive arrangements involving structures abroad),
- certain issues relating to the taxation of executives (non-taxation of a capital gain on the sale of securities, the impatriate regime, the "Dutreil" pact, tax arrangements such as "management package" schemes; see the map of abusive practices and arrangements);
- all transactions likely to give rise to the application of an 80% surcharge.
Taxpayers wishing to spontaneously regularise their tax situation in respect of other issues may do so with the business tax office (service des impôts des entreprises) or, in the case of executives, the individual tax office (service des impôts des particuliers).
Smec:
e-mail: dge.smec@dgfip.finances.gouv.fr
telephone: 01 49 91 15 60.
Warning: the advisability of such a regularisation process should be carefully considered beforehand, in order to have full visibility of its tax and even criminal consequences
Spontaneous nature of the process
The process must be spontaneous. The scheme therefore excludes businesses that are currently undergoing a tax audit, that have received a notice of audit or of examination of accounts, or that are the subject of an administrative or judicial investigation.
How to file the application
The tax compliance application must be filed with the business compliance department within the Large Business Directorate (Direction des grandes entreprises, DGE). To be admissible, it must include:
- a request for tax compliance;
- a written statement setting out precisely and in detail the issue that is the subject of the request, together with all supporting documents;
- amended returns covering the entire period not yet time-barred;
- supporting documents relating to the amounts concerned and enabling them to be calculated, in order to ensure the accuracy of the figures;
- a statement by the taxpayer certifying that the application is truthful.
To take account of the particularly complex nature of certain situations, the amended returns and the supporting documents relating to the amounts may be filed within 6 months after the filing of the tax compliance request accompanied by the other items.
Tax consequences
Taxpayers must pay all the additional taxes for which they are liable, or undertake to pay them in instalments agreed with the tax authorities.
However, the spontaneous nature of the process is taken into account through the adjustment, by way of settlement, of the rate of any applicable surcharges and of late-payment interest.
|
Standard rate (1) |
Rate in case of compliance |
Late-payment interest |
|
80% (fraudulent manoeuvres or abuse of law) |
30% |
Reduced by 40% |
|
40% (deliberate failure) |
15% |
Reduced by 40% |
|
10% (failure to file) |
0% |
Reduced by 50% |
|
(1) Rate that would have been applied if the failure had been discovered during a tax audit. |
||
Where a compliance request is made by the new owners and acquirers of a business within 18 months after the takeover of the business, three cases must be distinguished:
- where the tax consequences of the compliance are borne entirely by the seller (full liability warranty), the penalty remissions do not apply;
- where the tax consequences of the compliance are borne partly by the seller (partial liability warranty), the penalty remissions apply in proportion to the share provided for in the liability warranty agreement that remains payable by the buyer;
- where the tax consequences are borne exclusively by the buyer, the scale applies in full in accordance with the general case provided for in the circular.
Summary
Businesses and their executives have the option of spontaneously regularising certain irregularities with the business tax compliance department (run by the Large Business Directorate), provided that no tax, administrative or judicial proceedings are under way.
Requests may concern all tax irregularities discovered upon the takeover of a business, certain international tax issues (for example, failure to declare a permanent establishment or arrangements involving structures abroad), certain issues relating to the taxation of executives (for example, non-taxation of a capital gain on the sale of securities or the impatriate regime), as well as all transactions likely to give rise to the application of an 80% surcharge.
The regularisation is accompanied by a reduction, by way of settlement, of late-payment interest and tax penalties, according to a pre-established scale.
Our tax law firm can assist you.
