Regularising foreign accounts

With the full roll-out of the CRS (Common Reporting Standard), of DAC8 and of CARF, foreign bank accounts, life-insurance policies and crypto-asset platforms are now reported automatically to the French authorities. Once the information has been received by the DGFiP, voluntary regularisation is no longer possible and the taxpayer is exposed to surcharges of 80% (French Tax Code art. 1729-0 A), fines per account and a criminal risk of tax fraud (art. 1741 of the French Tax Code). Voluntary regularisation remains the only lever to limit the penalties.

The limitation period is extended to 10 years (LPF art. L. 169 al. 4) where the reporting obligations relating to foreign accounts (form 3916), foreign life-insurance policies (1649 AA) or trusts (792-0 bis) have not been complied with. This ten-year limitation applies to income tax as well as to inheritance tax and the IFI. Time runs from the end of the year concerned by the reporting obligation that was not met.

In addition to the tax evaded and the late-payment interest (0.20% per month), the following apply: (i) a fixed fine per undeclared account (French Tax Code art. 1736 IV): €1,500 per account, raised to €10,000 for accounts opened in non-cooperative States; (ii) an 80% surcharge (French Tax Code art. 1729-0 A) on the tax evaded in respect of concealed assets; (iii) a criminal risk of tax fraud (French Tax Code art. 1741) — penalties of up to 7 years' imprisonment and a €3m fine in aggravated cases.

The settlor, the deemed-settlor beneficiaries and the trustee are required to file three returns (French Tax Code art. 1649 AB, 2181-Trust forms): (i) an event-based return on the creation, modification or termination of the trust; (ii) an annual return of the value of the assets as at 1 January; (iii) a specific IFI return. A failure to file gives rise to a fine of €20,000 per return (French Tax Code art. 1736 IV bis) and the ten-year limitation.

Since the closure of the STDR (Service for Processing Amended Returns) in December 2017, regularisations are carried out by voluntary filing with the tax office, or directly with the DNVSF for high-stakes matters. The typical procedure comprises: (i) a preliminary audit and reconstruction of the assets; (ii) calculation of the tax, interest and fines; (iii) filing of the amended returns (income tax, IFI, inheritance tax); (iv) voluntary payment; (v) where appropriate, negotiation of a settlement or of a discretionary remission.

No. A voluntary regularisation that is sincere and complete is generally dealt with through the administrative channel, without referral to the prosecutor. The Bercy lock (LPF art. L. 228) requires, in principle, a prior complaint by the authorities to initiate prosecution. The judicial public-interest agreement (tax CJIP) or the CRPC may also resolve the criminal dimension. But the stakes must always be assessed — beyond certain thresholds, the criminal risk increases significantly.

Yes. An heir who discovers a foreign account not declared by the deceased must (i) file an amended inheritance return including the assets, (ii) file the missing form 3916 for the period after the death, and (iii) regularise the income (interest, dividends, capital gains) attaching to those assets. Failing that, the ten-year limitation and the penalties apply to the heir. Prompt regularisation is essential, particularly in jurisdictions subject to the CRS.

Yes. Accounts opened with foreign crypto-asset platforms (Binance, Kraken, Coinbase Global, etc.) must be reported via form 3916-bis. Capital gains on disposal are taxable under article 150 VH bis of the French Tax Code. With the progressive entry into force of CARF (Crypto-Asset Reporting Framework) and DAC8, the platforms now report the information to France. Voluntary regularisation of the omitted accounts and gains remains the only way to avoid heavy penalties and criminal risk — see our DAC8/CARF analysis.