A person is guilty of the offence of tax fraud when they have fraudulently evaded or attempted to fraudulently evade tax.
The nature of the method used is irrelevant: it may include, in particular, failure to file a return, concealment of taxable sums, organising insolvency or other schemes obstructing the collection of tax, or accounting irregularities (deliberate omission of entries, or recording inaccurate or fictitious entries in the journal). However, the offence must be fraudulent in nature, which presupposes that its perpetrator was driven by an intention to defraud.
The burden of proving intent lies with the prosecuting parties, namely the public prosecutor and the tax authorities.
Criminal penalties cannot apply to a taxpayer who has been relieved of the tax by a final court decision on substantive grounds.
In any event, they may only apply to the most serious cases of fraudulent concealment, having regard to the amount of duties evaded, the nature of the conduct of the person prosecuted or the circumstances of the case.
Independently of tax penalties, the person is liable to a fine of €500,000 and imprisonment for five years.
The penalties are increased to €3,000,000 and seven years' imprisonment where the fraud was committed by an organised gang or carried out or facilitated by means of:
- accounts opened or contracts entered into with institutions established abroad;
- the interposition of natural or legal persons or of any comparable body, fiduciary arrangement or institution (trusts or foundations) established abroad;
- the use of a false identity or false documents, or any other falsification;
- a fictitious or artificial tax domicile abroad;
- a fictitious or artificial act or the interposition of a fictitious or artificial entity.
In addition, the fine of €500,000 (or €3,000,000) may be increased to twice the amount of the proceeds of the offence (Law 2018-898 of 23-10-2018, Article 23, applicable to offences committed as from 25-10-2018).
In the case of concealment, these penalties only apply if the concealment exceeds one tenth of the taxable amount or the sum of €153.
The term of imprisonment incurred by the perpetrator or accomplice of the fraud is reduced by half if, having alerted the administrative or judicial authority, they have made it possible to identify the other perpetrators or accomplices.
These penalties are supplemented by:
- a ban on taking part in the work of the administrative tax commissions, the Abuse of Law Committee (comité des abus de droit) and the Research Tax Credit Advisory Committee (comité consultatif du crédit d'impôt-recherche) (automatic application; French General Tax Code (CGI), Article 1753);
- the posting and publication of the court decision (mandatory order by the judge, unless a specially reasoned exception is made in view of the circumstances of the offence and the personality of its perpetrator;
- deprivation of all or part of the civic, civil and family rights listed in Article 131-26 of the French Criminal Code (Code pénal) (optional order by the judge; however, mandatory, save for special reasons, for fraud committed by an organised gang or facilitated by the means referred to above);
- a ban on practising and suspension of the driving licence (optional order);
- exclusion from public procurement procedures (optional order).
For legal entities, in accordance with Article 131-38 of the Criminal Code, the fine is equal to five times that provided for natural persons (an amount increased to ten times as a result of the provisions of the Law of 23-10-2018 referred to above)
The perpetrators and accomplices of the same fraud are jointly and severally liable for payment of the evaded duties and penalties, provided that they have all been the subject of a final criminal conviction and that joint and several liability has been ordered by the criminal court.
Other types of offences
Individual or collective obstruction of a tax audit in particular exposes its perpetrator(s) to criminal penalties.
The same applies to the following offences.
Collective refusal to pay tax
Organising, through assault, threats or concerted schemes, a collective refusal to pay tax is punishable by two years' imprisonment and a fine of €9,000. Inciting the public to refuse or delay payment of tax is punishable by a fine of €3,750 and six months' imprisonment. In addition, the offender may be excluded from public procurement procedures.
VAT swindling.
Certain VAT frauds, in particular those aimed at creating fictitious tax credits, constitute swindling (escroquerie) and may be prosecuted under Article 313-1 of the Criminal Code.
Repeat offences relating to turnover taxes
A taxpayer who has actually been subject, within the last three years, to certain types of fines or surcharges may, if they intentionally commit a new offence of the same kind, be sentenced by the criminal courts to six months' imprisonment.
Organisation of false accounts by a professional
Business agents, experts, chartered accountants and similar professionals are liable to a criminal fine of €4,500 and/or five years' imprisonment if they take part in preparing falsified accounting documents.
Miscellaneous.
Several offences, other than those we have already examined, carry criminal penalties under specific provisions of the French General Tax Code. This is the case, in respect of direct taxes, of those referred to in Articles 1771 to 1783 B of the CGI, the penalty for which, moreover, often overlaps with the penalty for the offence of tax fraud: failure to separately declare income received abroad, collection of coupons belonging to third parties, production of false documents in order to obtain tax relief, etc. Another example: false affirmations of sincerity in respect of registration duties (CGI Article 1837).
