Delay or absence of tax returns in France: sanctions

When a tax return has not been sent even though the deadline has passed, several types of sanctions or penalties may be applied. Penalties for late filing may also be applied to tax returns (such as sales tax returns), as well as to estate tax returns.

Income tax return

Increases and penalties for late or non-declaration

In case of late declaration of his income, the taxpayer may see his tax increased according to one of the following penalty rates
– 10% if he declares himself, in the absence of a formal notice.
– 20% if the tax return is filed late within 30 days of the formal notice.
– 40% if the declaration has not been filed within 30 days of receiving a formal notice.
– 80% if the administration discovers that a hidden activity (undeclared or illegal) is being carried out. No formal notice is then necessary.

Insufficient or incorrect information

If the taxpayer has omitted certain information from the tax assessment basis when filing the tax return, Article 1758 A of the CGI provides for the payment of a 10% surcharge, which is increased to 20% if the tax return is filed more than 30 days after a formal notice.
However, the inaccuracy or omission must not be deliberate. In the contrary case (bad faith, fraudulent maneuver, abuse of right…), the increase can reach 40% or even 80%.

Interest in case of late payment

If the taxpayer is late in paying the tax, the administration will apply tax penalties. Article 1727 of the CGI establishes the payment of a late payment interest for any tax debt that has not been paid within the legal deadline. It amounts to 0.2% of the tax due per month of delay (i.e. 2.4% over 1 year).
Interest on late payment is calculated from the first day of the month following the date on which the tax should have been paid until the last day of the month of payment. In the case of income tax, the calculation starts on July 1st.
In addition, if payment is not made within 45 days of the date of assessment, a penalty of 10% of the tax due is imposed.

Non-taxable

If the taxpayer is not taxable, it is still imperative for him/her to declare his/her income in order to obtain a non-taxation notice. However, in case of delay, there will be no surcharge to pay.

Declarations for the calculation of income tax:

Article 1728 of the General Tax Code provides that a taxpayer who fails to file a return used to calculate the tax on time is liable to a 10% surcharge on the amounts due. This rate is applicable if the late taxpayer files the return on his own, in the absence of a formal notice, or if he submits it within 30 days of receiving a formal notice. However, this increase can be raised to :
– 40% when, despite the formal notice, the taxpayer has not complied with it within thirty days following the notification of the registered letter.
– 80% in case of discovery of a hidden activity (undeclared activity). In this case, the administration may apply such an increase without prior notice.

Inheritance declaration :

As regards inheritance, the declaration must be sent to the administration within 6 months after the death.
In case of delay or absence of declaration, specific rules apply. From the 1st day of the 7th month following the expiration of the initial 6-month period (or from the 1st day of the 25th month following the expiration of the special 24-month period), an increase of 10% will apply. If this declaration has not been filed within 90 days of receipt of a formal notice, an increase of 40% will apply.
In case of late payment of the inheritance tax, the taxpayer is subject to interest of 0.2% per month, plus
– An increase of 5% of the late payment interest from the 7th month following the death;
– An increase of 10% from the 13th month;
– An increase of 40% from the 20th month.

If the taxpayer’s financial situation is particularly difficult, he/she can request a postponement or a spread of payments to avoid such penalties. A request for a grace period can be addressed to the administration to avoid paying this increase.