TL;DR: Sums of money, securities or assets transferred to or from abroad through an undeclared account are presumed to constitute taxable income. You can rebut this presumption by proving that they correspond to income already taxed, exempt sums or sums outside the scope of taxation.
Which accounts must be declared?
If you are an individual domiciled in France, you must declare the details of accounts opened, held, used or closed abroad at the same time as your income tax return. This obligation also applies to associations and companies without a commercial form domiciled or established in France.
How does the presumption of taxation work?
Sums of money, securities or assets transferred to or from abroad through an undeclared account are, unless proven otherwise, considered taxable income.
This presumption does not apply to every international transfer: it concerns transfers made through an undeclared account under the conditions provided for by Article 1649 A of the French General Tax Code.
Income tax is assessed in the name of the individual who failed to make the required declaration, when that person is the beneficiary of the transfers or acts as an agent on behalf of another person.
The taxable event is the identification of the transfer, not the receipt of the transferred sums, securities or assets.
In which cases can you avoid taxation?
The presumption can be rebutted by evidence to the contrary. In particular, you can establish that the transfers correspond to:
- income already subject to tax;
- exempt sums;
- sums that fall outside the scope of taxation.
Which surcharges may apply?
Additional tax resulting from the presumption of income is subject to the specific penalty provided for in the first paragraph of Article 1758 of the French General Tax Code. It may also be subject to a 40% surcharge.
For sums of money, securities or assets transferred through undeclared accounts, the BOFiP summary table mentions a 40% surcharge provided for by Article 1758 of the French General Tax Code, as well as the sanction provided for by Article 1731 bis of the French General Tax Code.
How can the transfers be established?
As part of a desk audit or an accounting audit, account statements may be used against the taxpayer to apply the presumption of income attached to transfers made through an undeclared account.