How to declare foreign bank accounts on your French income tax declaration this year.
Many expatriate taxpayers may well have been surprised to find this year their tax declaration has been pre-filled by the tax authority to signal the need for them to declare a foreign bank account.
Thus, if you have previously made a tax declaration in France, on the main Form 2042, the authorities may well have ticked the box 8UU, which concerns foreign banks accounts ('Comptes ouverts, détenus, utilisés ou clos à l’étranger').
The authorities will have ticked the box based on information they will have received through automatic exchange of banking information between countries though the aegis of the OECD to use the information received.
In pursuit of combating tax evasion, the OECD has obliged countries to exchange automatically and annually data concerning bank accounts held abroad by foreign tax residents.
By automatically ticking box 8UU, the French tax administration is signalling that it has received information concerning your bank account, specifically:
- Details of the beneficiary of the account;
- The name of the bank, or financial institution;
- The balance of the account;
- Income from interest, dividends, and from certain insurance products;
- Sales proceeds from financial assets.
If you are resident in France and you hold a bank account abroad, you are required to declare it each year with your tax declaration, with Article 1649 of the tax code stating: «les personnes physiques (…), domiciliées ou établies en France, sont tenues de déclarer, en même temps que leur déclaration de revenus (…), les références des comptes ouverts, utilisés ou clos à l'étranger.»
Foreign bank accounts include those accounts held in any one of the exclusively on-line neo-banks that have been established in recent years, such as N26 and Monese.
They also include accounts that are inactive.
There are particular rules concerning Paypal accounts, whose base is in Luxembourg. There is no need to declare such accounts, provided three cumulative conditions are met:
- The account is held merely for the 'purpose of making online payments for purchases or receipts relating to the sale of goods';
- Such payments assume 'the holding of another account opened in France, (...) to which it is backed';
- The account has not been credited with total receipts greater than €10,000 in the year.
Completing Form 2042
If Box 8UU has not been ticked, to declare an account held abroad, in the 'Étape 3' page of the main F2042, titled 'Revenus et Charges' you need to tick the box ''Comptes ouverts, détenus, utilisés ou clos à l'étranger' .
On the 'Déclarations Annexes' page of the main form (which will open for you), you need to tick the box ‘Déclaration par un résident d'un compte ouvert hors de France' (No 3916). Click 'Validez'.
Under 'Prélèvement à la source et divers' you need to tick the Box 8UU - 'Comptes ouverts, détenus, utilisés ou clos à l'étranger'.
Completing Form 3916
You will see the link to F3916 on the left-hand column of the main page of your on-line declaration.
On the form you need to declare the information being requested for each account held.
The form is not self-evident, but in addition to your personal details, ensure that you provide:
- Account Name;
- Name of the bank/financial institution;
- Account number;
- Account type, eg current/savings/business account;
- Date of opening and, if applicable, closing;
- Address given to the institution, ie your address in France.
Section 3 need only be completed if you hold power of attorney on an account. Similarly, Section 2.2 concerns business accounts.
There are tough penalties for failing to file details of a foreign bank account, up to an increase of 80% in the tax due on sums appearing in the account, a fixed find of €1,500 (€10,000 if held in a tax haven) per undeclared account and a presumption of income, on which a tax charge will be applied.
Those who have any doubts about the seriousness with which the French tax authority takes the issue need only read our article Declaration of Foreign Bank Accounts.
*For assurance vie policies held abroad you need to tick Box 8TT.
The information provided here can only be of a general nature. If your circustances are complicated do take professional advice. Our English-speaking French tax partners Roche and Cie are available to assist you.