French News Archive

Money & Finance

Penalities on Undeclared Foreign Bank Accounts

Tuesday 05 July 2016

The Constitutional Council in France has ruled that the imposition of concurrent fines for the non-declaration of a foreign bank account is constitutional.

Earlier this year we reported on a British national resident in France who had been fined by the French tax authority for not declaring three bank accounts held abroad.

The fine amounted to €13,500, being the maximum penalty of €1,500 for each account for three years.

In recent years, chasing down undeclared foreign bank accounts has been a key priority of the French government, and it is bringing in its wake an increasing amount of litigation.

In a case recently before the French supreme administrative court, the Conseil d'Etat, an appellant contested the level of the penalty that had been imposed upon him for the non-declaration of a bank account for the period 2008-2010.

Under French law the penalty is €1,500 per account, which rises to €10,000 where the account is located in a tax haven that does not have a tax agreement with France.

However, a change in the law in 2012 increased the severity of the penalty where the sum in an account was greater than €50,000.

In such cases, a fine of 5% of the sum would also be imposed.

The Conseil d'Etat was unwilling to rule on the case, considering that the principle of equality before the law required that the matter be referred to the Constitutional Council.

In effect, they queried whether the additional penalty infringed the 'double jeopardy' principle that a person cannot be punished twice for the same crime.

The Constitutional Council has now ruled that the imposition of separate fines for multiple undeclared accounts was legal, but that the additional fine under the 2012 legislation was disproportionate and therefore unconstitutional.

In making their ruling the CC stated:

"En prévoyant une amende proportionnelle pour un simple manquement à une obligation déclarative, le législateur a instauré une sanction manifestement disproportionnée à la gravité des faits qu’il a entendu réprimer. Dès lors, sans qu’il soit besoin d’examiner l’autre grief, les dispositions contestées, qui méconnaissent le principe de proportionnalité des peines, doivent être déclarées contraires à la Constitution."

It now remains to be seen what changes in the law will be made by the government.

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