Tax Declarations

Hi I am a Newbie to this Forum and to France.
Maybe a bit naive but can anyone tell me how (in simple terms) how the system works.
Not the whole process!
Just how from me making my online declaration and tax people deciding on my tax due.

How do or can they check what I declare is actually exactly correct?

Do they randomly call some people in and go over their declarations/incomes with microscopes?

Has anyone on the Forum had this experience or been under the magnifying glass?

I just wonder now we have Brexit if the connections to the UK are as easily maintained??

Have no fear, financial info is shared between huge numbers of countries now. Certainly amongst the entire Western world. Including traditional confidentiality stalwarts like Switzerland and many well-known (former) tax havens, and all very accessible if anyone amongst the data-sharing nations wants to take a look.

Theoretically any personal info you might have a right to keep confidential, such as personal or medical or your comms (internet and phone calls) can also be bought privately in most places by anyone with enough money.

Depending on the regime, also officially for example the “Snooper’s Charter” legislation was officially introduced in France, initially “temporarily”. So your comms and internet activity is readily accessible by officialdom in France. This was refused by Parliament in the UK. But frankly such legislation is only about widening the scope of legitimisation of government and other activities that go on anyway.

The exceptions would be

(1) keeping it under the mattress - in which case you’d hit problems as and when you liquidate or seek to transfer an asset or bring cash into the system. Due to regimes’ rights for you to prove stuff like ownership and where did the money come from

And the other exception would be

(2) if you are very very rich or you have earned from ‘crime’. In which case learn how it’s done in these 2 starter primers from Oliver Bullough.

“Moneyland” .
Type B01NBWDPW8 into amazon.co.uk Search Box

and

“Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocrats and Criminals.”
Type B09TMHYZPS into Amxon.co.uk Search Box

I believe basically there are 2 triggers for investigations. One is random checks where they pick one or two justificatifs to ask for and if those tie up, that’s an end of it. The other is if a flag is raised, either by information on your tax form contradicting information already on their computer via automatic information sharing processes (other tax authorities, banks, online property rental platforms or freelancer platforms, other French authorites such as urssaf), or by their own algorithms which identify unusual patterns, eg owning expensive cars or a yacht or living in a high value property whilst declaring next to no income. France has a relatively joined up public information system, it knows what property each person owns and who lives there, what cars you own, what bank accounts you hold etc. So the tax office relies on people being honest but also on its own reputation for being pitiless when it detects fraud. Most people are honest even if only because nobody wants the fisc on their case.

I agree with this. I also think French citizens see nothing wrong with shopping their neighbour who is evading tax - as, after all, everyone else suffers if they do this - whereas in the UK people turn a blind eye because it’s seen to be “getting one over the tax man”.

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This is why anecdotally some extremely wealthy individuals would drive older non-flashy cars and dress in clearly old, well-used (but quality if you looked) clothing. Same in Italy. Not just social discretion, but avoiding conspicuous displays of wealth. Shoes can be a clue.

Generally you submit your figures and a computer does the rest. However various things can mean your account is flagged for attention such as anything that is a big jump from previous year, or stuff that is considered unusual. And as other have said they will manually check a proportion.

A year of so after we started declaring here we were selected for a check. We were asked to provide absolutely everything to prove our figures were correct, which was quite a lot of work as at that point we had something like 45 bank/savings accounts between us, plus a small business, plus rental properties, plus some self-employment income. However our figures were accurate, so that was the end of it.

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Bitcoin and other e-accounts should help these days :laughing:
I also find that Cash is King when I deal with some Tradesmen - I have saved thousands in tax when I paid with real notes and I will continue to do so!

Good for you. I’m currently in Skopje and it doesn’t look like anyone pays their taxes here either. Broken pavements, potholed roads, litter everywhere, weeds. And atrocious medical care according to everyone I’ve spoken to.

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Nothing to do with France then so why whinge on here stay in Macedonia and pay your taxes to the corrupt government!

Taxing times can bring out the best and the worst … :wink: :dizzy_face:

Anyone with tax queries can talk with a real person, at their local tax office…
Make an appointment… or stand in the queue @coporallittle … best of luck.

Although e accounts have to be declared same as any other account.
Paying tradesmen cash needs a fair amount of trust because if they do a bad job there is no insurance and you have no comeback. You can’t make a formal complaint because as soon as you say you paid cash and have no paperwork you are inviting being fined.
We all make our own choices but personally I am easier in my mind and my conscience and my sense of self respect staying within the rules and paying my dues.

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Bitcoin - no account necessary - Cold storage - keeping the info on a USB - Leger etc. No need for the authorities to know what and where. Also the exchange rates when the e value increase is pure profit when you spend the assets. And they do not have to be changed into hard currency at any point.

If your Bitcoin publicity stunt works no one will pay tax, which is not likely to help society.

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Which will no doubt be much comfort to you when you are fined €45,000 for illegal employment practices and given choice of prison or an OQTF. Thankfully the majority of people recognise that society works best when all contribute. So easy for this to be picked up these days.

Not something an intelligent person brags about. Especially as it’s a french national sport to shop people to the tax authorities, so be nice to your neighbours.

quote=“coporallittle, post:12, topic:47662”]
And they do not have to be changed into hard currency at any point.
[/quote]

Unless you want to buy a baguette…

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Especially given that it’s no secret that the fisc checks onine activity on facebook, public forums etc to pick up fraud!

Spot checks, or something that flags up in their system. What those flags might be is known only to the tax inspection system itself, I don’t think that there are any publicly available and verified sources as to what triggers an investigation.

You get a letter, or these days, you probably get made aware that a communication from your local tax office is in your “personal communication space” for you to go and take notice of.

Yes, they go into detail, as assigning an inspector to a case is time consuming and costly for the inspectorate, they only generally take on something if they think that there is a worthwhile chance of getting some money out of it.

Yes, I had one in 2021, because I am a sole trader (Entreprise Individuelle), work with clients and suppliers all over the world. They looked at both my business and personal tax affairs. They knew all of the bank accounts that both I, and my spouse, had opened.

You are invited to an opening interview, in which the inspector indicates which “parts” of your declaration they are most “interested in”, but that the investigation may turn up other queries which would subsequently also need to be addressed. The inspection can go on for 3 months (if you fall under the accelerated program), or much, much longer, if they find other stuff of interest, or if they believe that you are somehow being evasive or uncooperative. You can represent yourself, or seek representation through an accountant or tax advisor.

The inspectors like to have a first interview without your accountant/tax advisor present (if it is based on a business inspection), because then they can ask you all sorts of innocuous questions by which you can tie a noose around your neck, without being counter-checked by the accountant - a bit like being cross-examined without your attorney present. It is best to be prepped beforehand by your representative, to avoid saying anything which you might deem completely unsuspicious and which in the inspector’s mind will raise more red flags. If you can, it is best to avoid being alone at this first interview. Any subsequent interviews (I had a 2nd physical one after the initial one and a few email exchanges after a request for documents), can be handled by your representative.

Obviously, as an individual, you are potentially in a much weaker position, as the tax inspector knows which loopholes people target, and will try to determine whether they are being exploited incorrectly, or whether you are just making simple mistakes in your returns.

I couldn’t answer that question specifically, as I’ve been in the French tax system for 30 years, but what I can say is that at the first interview, they should ask you whether you understand French, as otherwise there may be a requirement for a translator, or a representative that is conversant in both English and French. The inspector on my case had come into the investigation assuming that I didn’t speak any French, presumably just from the name alone, but it soon became clear that they had no idea of the profession I was engaged in, which has a legal requirement for a certain level of French, in order to sit the qualifying exam. Additionally, not understanding what the inspector is asking for, or hinting at, can lead to all sorts of misinterpretations on both sides.

The basic rule is to remain polite and courteous at all times. That doesn’t mean that you have to roll over like a dog having its belly rubbed, but be prepared to back up any counters to their arguments with some solid legal foundation taken from French tax law, European tax law, and any international tax law treaties to which France is a party. In my case, the inspector focussed on VAT obviously, as that’s a classic in French business taxation, but also on a particularly odd withholding tax regime for work carried out on behalf of non-French domiciled clients. There is a current drive to try and claw back that withholding tax from unsuspecting French-based service provider professionals - it can amount to quite significant penalties with interest in the absence of a “tax-neutral” double taxation treaty.

On a personal level, there is usually less to be gained unless they have a suspicion that you aren’t fully declaring all of your worldwide income to them, even if some of it is subject to another country’s taxation.

You are still required to declare any crypto accounts. If you also trade using a crypto account, then you must also file a business tax return on profit/loss (they are considered as bénéfices non-commerciaux).

I DID EXACTLY THAT. I had been here for about 10 years, always filling out the return the same way which we had been shown during our first year. I decided just to check that I was still putting the right amounts in the right boxes.

A very helpful man at the local tax office went through my completed return explaining what everything was for. He queried two entries. “Why have you put this amount in that box and that amount in that other box? They should go in these other boxes” which he pointed out to me. I made the changes, signed the return swearing that everything declared was the truth, and sent it off.

Two months later I received a ‘phone call from Les Impots. “Why have you put these two amounts in these other boxes?”

“Because you told me to”

“No, these amounts should be in this box and that box” referring to the locations I had first put them in.

“Shall I change them then a resubmit my return?”

“No need, I will simply change them on my computer” (despite my having signed them as the truth, the whole truth etc)

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yep, one has to grin and bear it…
I was rebuked with “we would never have said that”… just this year… but, I just smiled and left it at that… noted where to put the figures… over and out.

For First-timers like @coporallittle (who admits to being naive)… a visit to the Fisc will get him/her into the system officially and the rest … will follow along… :+1: :rofl:

You’ve signed to say the figures/amounts are not fudged (to the best of your knowledge) … :wink: :wink: the fact that you’ve (seemingly) put them in the wrong place… is now corrected… during a face-to-face interview… :+1:

So many people have assumed Bitcoin is untraceable only to have been caught out.

This is a long - but enjoyable if you’re into cryptocurrencies - read on how Sarah Meiklejohn (now a professor at UCL, I believe) proved how Bitcoin can be traced.

There’s a reason why people on the dark web switched from preferring to transact using Bitcoin to Monero!