Tax evasion in France

Definition of tax evasion and consequences of its detection by the tax authorities 

In France, tax evasion is defined by Article 1741 of the General Tax Code (CGI) as a deliberate act aimed at evading sums owed to the tax authorities. It includes the deliberate omission of declarations, the concealment of income, the use of false documents, and the implementation of fraudulent manoeuvres. Penalties vary according to the seriousness of the offence, with fines of up to EUR 500,000, tax increases of up to 80%, and, in the case of aggravated fraud, a prison sentence of up to seven years. Specific penalties also apply to certain circumstances such as the failure to declare foreign bank accounts (CGI article 1649 A).

French tax authorities use sophisticated methods to detect tax evasion. The automatic exchange of financial information at an international level under the Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA) agreements is also an essential tool for identifying undeclared foreign assets. Targeted tax audits, whistleblowing (e.g. by employees and business partners), and bank transaction analysis are also common tools. 

Possibilities of amending declarations or declaring additional income 

Taxpayers have a three-year period (10 years for undeclared foreign income) under Article 169 of the Livre des procédures fiscales (LPF). 

This can be done by filing an amended tax return. In some cases, taxpayers may voluntarily declare their undeclared income and negotiate reduced penalties. 

Conditions for voluntary disclosure of tax evasion 

Since the closure of the Service de Traitement des Déclarations (STDR) in 2017, taxpayers have been able to voluntarily declare their undeclared income and negotiate reduced penalties, and voluntary declarations of tax evasion in France are now directly controlled by the tax authorities. Voluntary declarations must be voluntary, complete, and made prior to any tax or judicial investigation (Article 62 of the LPF). The aim is to encourage taxpayers to regularise their tax affairs, while ensuring tax fairness. 

Consequences of voluntary disclosure of tax evasion

Taxpayers who opt for voluntary disclosure are generally entitled to more favourable treatment. Penalties for late payment and bad-faith actions (Articles 1728 and 1729 of the CGI) are greatly reduced and may be waived if good faith is proven. Criminal prosecution can also be avoided if the return is found to be complete and compliant. However, regularisation does not exempt the taxpayer from payment of the tax due or interest for late payment. 

When the option for voluntary disclosure cease?

Voluntary disclosure is no longer possible once a tax audit has been initiated, or evidence of tax fraud has been obtained by the tax authorities. This provision is designed to prevent abuse and encourage voluntary disclosure. 

The main areas where voluntary disclosure plays a major role 

The main areas of voluntary disclosure in France are:

• Undeclared foreign bank accounts (Article 1649 A of the CGI);
• Trusts and other complex wealth structures;
• Abusive financial arrangements; and
• Omission of property or capital income. 

These areas represent major tax issues for the authorities, particularly in the fight against illicit financial flows. 

Common practices by foreigners considered to be tax evasion in France 

Non-residents and foreign investors often underestimate their tax obligations in France. The most common errors are failure to declare rental income from French real estate, failure to declare real estate capital gains, and failure to comply with obligations relating to foreign bank accounts. 

These failures are punishable by lump-sum fines and substantial surcharges.

Advising clients who have evaded tax and the role of the professional 

It is essential to take a proactive approach to clients who have evaded tax. A tax lawyer or chartered accountant is able to:

• Analyse the client's tax situation in detail and assess the risks and obligations of regularisation;
• Emphasise the long-term benefits of tax compliance and encourage full transparency in voluntary disclosures;
• Negotiate with tax authorities to minimise penalties while ensuring compliance with legal obligations; and
• Anticipate regulatory developments, particularly in the field of international taxation, to avoid the pitfalls associated with increased transparency in information exchange. 

Conclusion

Voluntary disclosure is an opportunity for taxpayers to improve their situation while limiting penalties. For foreign tax advisors, understanding French specificities is crucial not only to advise clients effectively, but also to identify opportunities for cross-border cooperation.

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Claudine Heinrich is a highly skilled chartered accountant with a strong background in European tax law. With years of experience in financial management and accounting, she is dedicated to helping businesses—from startups to large corporations—navigate complex financial and tax regulations with confidence. Her expertise spans tax optimisation, regulatory compliance, financial analysis, and strategic business consulting.