Article 1649 A of the French Tax Code requires residents to report each year, with their income tax return, the accounts opened, held, used or closed abroad (form no. 3916). Three points make up most of the litigation: the notion of an account used, clarified by the Conseil d'État in 2019; the power of attorney over a third party's account; the fine of article 1736, IV, 2, due per account and per year not declared. This page analyses the text; regularisation and its costs are dealt with in our page regularising foreign accounts.
The obligation to report accounts held abroad is in the second paragraph of article 1649 A (translated from the French text): individuals, associations and companies that do not have a commercial form, domiciled or established in France, must declare, at the same time as their income or results return, the references of the accounts opened, held, used or closed abroad.
Four verbs, and each counts: opened, held, used or closed. An account merely held, even without movement, must be reported; so must a third party's account over which you have a power of attorney that you also use; so must an account closed during the year. The report is made on form no. 3916-3916 bis, attached to the income tax return.
The third paragraph carries the most formidable presumption of the regime: sums, securities or values transferred abroad or from abroad through accounts not declared as required by the second paragraph constitute, unless proved otherwise, taxable income. Proof to the contrary consists in establishing that the sums have already been taxed, are exempt or fall outside the scope of tax (BOI-CF-CPF-30-20, § 240).
This text works together with the fine of article 1736, IV, 2 of the Tax Code (€1,500 per undeclared account, €10,000 where the account is located in a State that has not concluded with France an administrative-assistance convention giving access to banking information) and with the ten-year limitation of article L. 169 of the Book of Tax Procedures, set aside where the taxpayer proves that the total credit balances of the foreign accounts did not exceed €50,000 at any time during the year.
To fill in the form each year (accounts, life-insurance policies, crypto-assets), see reporting foreign bank accounts. To regularise omitted years, see regularising foreign accounts.
The administrative doctrine takes a broad definition: an account is deemed held by the person who is its holder, joint holder, economic beneficiary or economic right-holder, and used by the person who has made at least one credit or debit transaction on it during the year (BOI-CF-CPF-30-20, § 120).
The Conseil d'État has clarified the notion of use: neither the posting of interest produced by sums already deposited nor the deduction of account-keeping fees constitutes use (Conseil d'État, 4 March 2019, no. 410492). The practical scope of this decision is limited: from 1 January 2019, according to the doctrine, all accounts held abroad must be reported, even those not used.
This reading exposes a wide audience: heirs pending distribution of an estate, spouses who are joint holders, children holding a power of attorney over the account of an expatriate parent, executives who are signatories of foreign accounts.
An account is used as soon as a credit or debit transaction is made on it during the year, whatever the amount; capitalised interest and account-keeping fees do not count (Conseil d'État, 4 March 2019, no. 410492). Since 1 January 2019, the doctrine further requires the reporting of all accounts held, including inactive ones (BOI-CF-CPF-30-20, § 120).
A person who holds a power of attorney over an account opened abroad by an individual, an association or a company that does not have a commercial form must report it where that person uses the power of attorney for themselves or for a resident (BOI-CF-CPF-30-20, § 50). Where both spouses are linked to the same account, one report is filed for the household.
Companies of commercial form (in particular SA, SARL, SNC) are not subject to the obligation; civil companies, joint ownerships and associations are (BOI-CF-CPF-30-20, § 70). For an executive who signs on the foreign account of a commercial company, the doctrine does not expressly cover the case: the personal obligation is assessed according to the executive's powers and the use made of the account, and the firm examines it case by case.
The fine of article 1736, IV, 2 applies to each year not time-barred for which a report was due (BOI-CF-INF-20-10-50, § 20). Five accounts not declared for six years represent €45,000 (€1,500 × 30), or €300,000 if the accounts are located in a State without administrative assistance. Where the tax authorities rectify tax in respect of the sums held in these accounts, the 80% surcharge of article 1729-0 A applies instead of the fine, and cannot be lower than it.
Article L. 169 of the Book of Tax Procedures raises the reassessment period to ten years in the event of a breach of article 1649 A, for the income relating to the undeclared accounts only. The extension does not apply where the taxpayer proves that the total credit balances of the foreign accounts did not exceed €50,000 at any time during the year concerned: the ordinary three-year period then applies. Proof is made by the statements of all the accounts, over the whole year. This is the first point we check.
The firm conducts wealth audits to identify foreign accounts that have been overlooked or mischaracterised (powers of attorney, joint accounts, estate accounts, accounts of civil companies). Where years have not been declared, the approach is set out in our page regularising foreign accounts.
For audits under way (request for justification, reassessment proposal), we build the defence on the characterisation of the use of the account, the €50,000 threshold, proof to the contrary against the presumption of income and the penalty regime.
An account on which you have made at least one credit or debit transaction during the year, whatever the amount. The posting of interest and the deduction of account-keeping fees are not enough (Conseil d'État, 4 March 2019, no. 410492). The question has lost interest for accounts of which you are the holder: since 1 January 2019, the doctrine requires the reporting of all accounts held, even inactive ones. It remains decisive for third parties' accounts over which you have a power of attorney.
Yes, where you use the power of attorney for yourself or for a resident, over an account opened by an individual, an association or a company that does not have a commercial form (BOI-CF-CPF-30-20, § 50). Typical case: the child who pays a parent's expenses from the parent's foreign account. A power of attorney never used does not, by itself, make the account "used".
The accounts of a civil company, a joint ownership or an association established in France are reported by their representative. For the foreign account of a commercial company on which you are a signatory, the doctrine does not expressly provide for a personal obligation; everything depends on your powers and the use you make of the account. In case of doubt, a written analysis before the filing date is preferable.
Yes, from one year to the next: the fine of €1,500 (or €10,000) applies to each year not time-barred. An account not declared for six years represents €9,000 (or €60,000). However, the fine cannot be combined with the 80% surcharge of article 1729-0 A: where tax is rectified in respect of the sums in the account, the surcharge applies in its place, with an amount at least equal to the fine (BOI-CF-INF-20-10-50, § 110).
File the missing forms 3916 and, if the account produced income, amended returns, before any audit. The STDR closed on 31 December 2017: the approach falls under ordinary law. Its cost and effects (fine, late-payment interest, absence of the 80% surcharge, criminal risk) are detailed in our page regularising foreign accounts.
They fall under a separate obligation, article 1649 AA of the Tax Code, declared on the same form no. 3916-3916 bis. The fine is €1,500 per undeclared policy, or €10,000 for a State without administrative assistance (Tax Code art. 1766); the limitation is also ten years (LPF art. L. 169). See our page reporting foreign bank accounts.
Annual how-to: accounts, life insurance, crypto-assets.
Voir la page Foreign accountsLimitation, surcharges, worked cases, Switzerland and trusts.
Voir la page Non-residents practiceGeneral framework: minimum rate, social levies, tax treaties.
Voir la page WealthDetermination of tax residence and its reporting consequences.
Voir la pageAn initial confidential conversation to audit your positions and organise a preventive voluntary disclosure, or to defend your interests in the event of an audit.
Sources
Cette note présente l'état du droit à sa date de publication et ne constitue pas un avis juridique. Chaque situation appelle un examen particulier.
© BENSAID Avocats. The information on this site does not constitute legal advice and cannot substitute for personalised tax analysis.
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