France Issues Tax Regularisation Circular: Update from Nair & Co. International Tax Compliance Services Team (Sunnyvale, CA) - The French Finance Ministry via a circular issued on June 21st, has laid down certain norms for the treatment and tax consequences applicable to individual French taxpayers, who voluntarily want to regularise their tax situation with respect to untaxed offshore accounts. The French Finance Minister Cazeneuve has submitted the circular to the French National Assembly. Nair & Co. summarizes the details of the circular as below:
All French taxpayers with untaxed assets held abroad have been urged by the authorities to regularise their accounts in accordance with the French law, under the conditions defined in the circular. The circular puts emphasis on the policy of transparency and justice, thus assuring the equality of citizens before the French taxation authorities. It lays down the terms for tax administration including how to file such declarations and their subsequent treatment. The penalty rates for deliberately failing to meet domestic tax obligations for the tax payers having assets held abroad have been reduced. The penalty rate has been reduced to 30 per cent for so-called “active” fraudsters from the earlier 40 per cent (currently imposed in the event of a non-declaration), and for “passive” offenders it has been lowered to 15 per cent. Passive offenders include heirs with unreported assets located abroad. In case of non-reporting of wealth held abroad, the annual proportionate fine levied is to be capped at three per cent of the value of total assets for active tax evasion and at 1.5 per cent of wealth held for passive tax evasion. Taxpayers are required to settle evaded taxes, in addition to paying the penalties and fines due. It should be further noted that an amendment to the draft legislation, proposed by French Finance Minister Pierre Moscovici has been adopted by the National Assembly namely any country which does not agree to conclude an automatic information exchange agreement with France is to be placed by France in the category of “black list” of non-cooperative states.
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