France’s New Voluntary Disclosure Scheme
By Mary Taylor, Partner, Blevins Franks
French Finance Minister Bernard Cazeneuve has announced a new voluntary disclosure procedure for French residents who hold assets overseas.
This disclosure procedure will be overseen by the National Department of Auditing and will allow those who disclose undeclared foreign accounts to avoid full exposure to the penalties and fines that would normally be due.
No criminal procedure will be opened against taxpayers going through the voluntary disclosure procedure.
Penalties will be reduced from the normal rate which is 40% to 30% for so-called “active” fraudsters and to 15% for “passive” offenders.
An active offender is someone who is actively concealing assets abroad on a current and ongoing basis. A passive offender may have assets abroad which they may have inherited some years ago or have bank accounts which were opened abroad some years ago which are now just turning over interest.
Fines charged for not reporting assets held abroad are normally levied at 5% of the value of assets not reported. Under the scheme, fines will be capped at 3% for active tax evasion and at 1.5% for passive tax evasion.
The procedure will affect all taxes due on income since 2006, and wealth tax and inheritance tax since 1st January 2007 on income or informal gifts received on or paid from the foreign account in question.
The scheme only applies to assets of a legitimate and proven source. For assets of which the origin cannot be proven, fines of up to 60% may be imposed.
Late payment interest will also be due at 4.8% per annum.
No time limit has been set on the disclosure scheme as yet. However, it is recommended that persons with undeclared foreign funds disclose under the scheme without delay.
More Exchange Of Information Ahead
France, along with its fellow G5 countries the UK, Germany, Spain and Italy, will develop and pilot a new multilateral automatic tax information exchange agreement. They see this as an important, early step in a much wider move towards a new international standard which would remove the hiding places for those evading taxes.
The information to be automatically exchanged includes: name and address of account holder; account number; bank details; account balance; gross interest, dividends and other income; gross proceeds from the sale or redemption of assets. It covers deposit and portfolio accounts.
This latest push for automatic exchange of information started with the US’ Foreign Account Tax Compliance Act (FATCA). Foreign financial institutions have to enter into agreements to automatically report on US clients. It was only a matter of time before other countries followed suit.
The EU will negotiate an updated Savings Tax Directive tax accord with Switzerland. The Swiss Private Bankers Association has urged the government to opt for an automatic information exchange regime instead of its current approach, in particular with the EU.
All this signals the beginning of what will inevitably be the move towards a global system of information sharing between countries on a multilateral basis.
For advice on compliant, tax efficient ways of holding your assets in France, and the best locations for your money, speak to an experienced wealth manager like Blevins Franks which has decades of experience advising British expatriates on their tax planning.
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All advice received from any Blevins Franks firm is personalised and provided in writing; this article should not be construed as providing any taxation and / or investment advice. All information contained in this article is based on Blevins Franks’ understanding of legislation and taxation practice, in the UK and overseas, at the time of writing; this may change in the future.