France - Regularizing Your Tax Situation

France is increasing pressure on its taxpayers who have non-declared assets outside of France.

On 27 August 2009 Christine Lagarde and Hans-Rudolf Merz, the French and Swiss Finance Ministers, signed the proposed new French and Swiss double taxation treaty, which will enable France, on request, to obtain information on banking assets in the case of tax evasion as well as tax fraud. Such requests, however, must name the taxpayers concerned and be supported with the usual documentation: this procedure will not therefore enable France to go on a fishing expedition. However, according to one interpretation of the text, France will not necessarily have to indicate at which banks such assets are held. The intention is that this agreement will enter into force from 1st January 2010 subject to ratification and to a possible referendum in Switzerland.

Furthermore, on 30th August, Eric Woerth, the French Budget Minister, announced that his department was in possession of a list of the names of 3,000 French taxpayers who have non-declared assets in Switzerland and invited such taxpayers rapidly to approach the Unit set up for Voluntary Disclosure. He emphasized that this Voluntary Disclosure Unit will close at the end of 2009.

In view of these developments it is very important that any French taxpayers affected by these developments seriously consider regularizing their tax situation. After 31st December 2009 the conditions for regularizing tax affairs in France are uncertain but will almost certainly be far more penalizing than at the present time.