The French tax authority are entitled to dip into your bank account to recover unpaid taxes, without the need for a court order.
If you incur a debt in France, or you seek to recover money owed to you, the only legal remedy ordinarily open to a creditor is to seek a court judgement for recovery of the debt.
When the court order has been obtained, if necessary, a semi official bailiff (huissier) can then be engaged to collect the cash. Certain notarial acts also grant the direct power of enforcement using a bailiff.
Using the court order the bailiff has the power to seize a bank account to obtain the funds, in a process called saise-attribution.
However, the powers granted to the French tax authority to recover unpaid taxes are far more substantial, for in their case no court order to seize funds is required.
When a taxpayer has not paid all or part of his taxes, the tax authority may, after written attempts to recover the debt, send a notice to their bank demanding the funds.
This procedure is called L'Avis à Tiers Détenteur (ATD), a cryptic form of words, which effectively means 'notice to a third-party holder of funds'.
A similar process operates in relation to the recovery of fines and penalties, called opposition administrative.
The notice obliges the bank to inform the tax authority of the state of their client's current and savings accounts and to use them to repay the tax debt.
If the accounts are in debit, the procedure ends there. If there is a credit balance, the bank is obliged to block the account for 15 working days, when it must then assess the balance available on the account and whether it can pay the debt.
In making that assessment the bank is required to ensure that their client is left with sufficient funds to meet their immediate day-to-day requirements.
That minimum balance (solde bancaire insaisissable) is determined annually by the government, which is currently €548, irrespective of the size of the household. Certain social security benefits are also protected, so can be added to this figure. Pension income and unemployment benefits are not protected.
Where the bank decides sufficient funds are available they notify the tax authority. The taxpayer then has two-months to contest the notice, an appeal which itself is made to the tax authority, although it is possible to bring a legal action to prevent seizure.
The process can also be used against non-residents, but only in relation to their French bank account.
Separately, there are European wide debt recovery procedures in place that enable a court order in one European country to be enforced in another Member State, including seizure of funds held in a bank account in another country. The UK has chosen to opt out of this legislation.
Whether the seizure is successful or not, the bank is entitled to impose a charge for processing of the notice. In the past, the charges were frequently in excess of €100. A new law that will come into effect in 2019 now limits the charge to a maximum of 10% of the debt, subject to a maximum sum, which will be regulated by decree.
Although in recent years a similar power has been granted to the UK HMRC, it is far more circumscribed, with only debts above £5,000 subject to the procedure, a minimum balance of £1,000 to be maintained, and only after a face-to-face interview has taken place.