COMPARATIVE GUIDE
9 January 2025

Tax Disputes Comparative Guide

Tax Disputes Comparative Guide for the jurisdiction of France, check out our comparative guides section to compare across multiple countries
France Tax

1 Legal framework

1.1 Which laws govern taxation and tax disputes in your jurisdiction?

In France, the provisions on taxation are generally set out in the General Tax Code. However, certain taxes on goods and services are governed by the Tax Code on Goods and Services.

Provisions on tax disputes are generally included in the Tax Procedure Handbook, although certain penalties are set out in the General Tax Code or the Tax Code on Goods and Services.

Moreover, if a dispute is not resolved with the French tax authorities, it can be brought before the administrative, civil or criminal courts, depending on the tax challenged or the penalty applied. In this case, the proceedings are governed by the applicable codes – respectively:

  • the Administrative Justice Code;
  • the Civil Procedure Code; or
  • the Criminal Procedure Code.

Specific provisions regarding social security contributions which can be assimilated to taxes are included in the Social Security Code; and customs duties are included in the Customs Code.

1.2 Do any other regional, national or supranational rules or regulations have relevance in this regard?

The doctrine of the French tax authorities – including their own guidelines, ministerial responses to questions from members of Parliament and decisions on taxpayers' situations (rulings) – may clarify or introduce tolerances to the tax provisions mentioned in question 1.1. This doctrine is enforceable before both the tax authorities and the courts.

Moreover, the tax treaties concluded by France with other countries provide for tax regulations on international matters and can be invoked in order to resolve disputes against the French tax authorities – notably as regards the place of tax residence.

EU tax regulations may also be incorporated into French law. This is specifically the case for:

  • value-added tax (VAT), which is subject to harmonised regulation inside the European Union; and
  • some anti-abuse rules.

The European Court of Human Rights (ECtHR) may also play a role where a tax rule is challenged by a taxpayer on the grounds that it does not comply with the European Convention on Human Rights. For example, the ECtHR condemned the French procedure for the delivery of search warrants in case of suspected tax fraud because it did not respect the right to an effective remedy.

1.3 Which authorities are responsible for enforcing the tax laws? What is their general approach to enforcement?

The tax authorities are responsible for enforcing the tax laws and customs officers are responsible for enforcing customs duties. They initially use preventive measures to educate taxpayers on the applicable rules by regularly updating their websites.

The tax authorities:

  • collect taxes and conduct audits on tax returns filed by taxpayers to ensure compliance with the tax laws; and
  • recover taxpayers' debts towards the Treasury and can take specific measures in this regard, such as:
    • wage withholding;
    • the attachment of moneys; and
    • the seizure and sale of immovables or other assets.

Exceptionally, if tax fraud is suspected, the tax authorities can apply to a civil judge for a warrant to search premises in order to collect documents evidencing this fraud.

To prevent taxpayers from infringing the tax rules, the tax authorities can apply penalties. Public prosecutors can also play a role in the enforcement of tax laws when taxpayers are suspected of tax fraud by requesting the courts to pursue them accordingly.

1.4 To what extent do the tax authorities cooperate with (a) other national authorities and (b) their international counterparts in enforcing the tax laws? Does this vary depending on the applicable tax?

The tax authorities can cooperate with various national institutions, such as:

  • the social security agencies;
  • Customs;
  • the Ministry of Economy;
  • the National Financial Prosecutor's Office; and
  • Tracfin (the French anti-money laundering body).

This cooperation involves the sharing of information on taxpayers' revenues, assets, financial flows and similar. It is particularly common in cases of:

  • tax evasion;
  • suspicious financial transactions; or
  • criminal investigations.

In the European Union, there are several regulations that facilitate the exchange of information between member states, such as directives promoting:

  • cooperation between member states on tax matters; and
  • the harmonisation of the EU VAT system.

France also participates in different mechanisms established by the Organisation for Economic Co-operation and Development, such as the Common Reporting Standard, which facilitates the exchange of information between states, sometimes automatically.

Finally, France has concluded many double tax treaties which provide for exchange of information systems. It has also concluded specific agreements with certain countries for this purpose, such as the Foreign Account Tax Compliance Act with the United States.

2 Tax investigations

2.1 How do the tax authorities monitor compliance with the tax laws? Does this vary depending on the individual taxpayer or the applicable tax?

The tax authorities will typically conduct a tax audit on the tax returns filed and check them for compliance with the tax laws. To this end, they will check whether:

  • the taxpayer's interpretation of the laws is correct;
  • all revenues have been correctly declared; and
  • no excessive charges have been offset.

If no return has been filed, the tax authorities will:

  • request information from the taxpayer itself or from third parties; and
  • check whether the taxpayer's declarative and payment obligations have been regularly complied with.

For companies, the tax authorities will assess the consistency between the company accounts and the tax returns. For individuals, the tax authorities will assess the consistency between the revenues declared and the lifestyle of the individual (eg, real estate or cars owned).

The tax authorities will also check whether the information declared by a taxpayer is compliant with what has been declared by third parties such as banks or other businesses.

Finally, the tax authorities will use data analysis tools to detect flaws or special features in tax returns, such as the remuneration of a contractor located in a tax haven.

2.2 What typically triggers a tax investigation in your jurisdiction?

A tax investigation is typically triggered for individuals when they declare high revenues or foreign revenues.

For companies, tax investigations may be triggered, for example, where they:

  • request a tax refund (eg, a value-added tax (VAT) refund or an income tax credit);
  • undertake cross-border operations; or
  • conduct businesses with contractors located in tax havens.

For big companies (ie, with a turnover exceeding €750 million), a tax investigation is usually conducted every three years.

2.3 What is the limitation period for commencing a tax investigation in your jurisdiction?

Generally, a tax investigation must be initiated by 31 December of the third year following that of:

  • the assessment;
  • the collection notice; or
  • the payment.

This is the case for both individual income tax and corporate income tax.

With regard to taxes based on turnover, such as VAT, a tax investigation cannot be initiated after 31 December of the third year following that in which the tax was payable. In the case of fraudulent schemes, the limitation period can be extended to six years.

With regard to local taxes, a tax investigation cannot be initiated after 31 December of the year following that in which the tax fell due. This does not apply to the territorial economic contribution, which is a local tax due by companies, which can be subject to review until 31 December of the third year following that in which the tax fell due.

In case of tax fraud or hidden activities, the limitation period is extended to 10 years for both individual income tax and corporate income tax. Similarly, where taxpayers fail to declare their foreign bank accounts or assets, the limitation period is extended to 10 years.

The limitation period can also be suspended in certain cases – for example, where the tax authorities seek international assistance.

2.4 How does a tax investigation typically unfold in your jurisdiction?

The tax authorities can start their investigation with a simple letter seeking clarification on the tax situation of a taxpayer – for example, income declared or a tax refund requested. The letter may ask the taxpayer to submit certain documentation. The investigation will end if the tax authorities are satisfied with the answer provided.

Otherwise, the taxpayer will receive a letter from the tax authorities informing it of their intention to conduct a tax investigation. The tax authorities will generally schedule a meeting with the taxpayer in order to ask questions and request documentation (eg, financial statements, bank account information, invoices, contracts).

After this meeting, the tax authorities will generally request the submission of complementary information by email. Once the investigation is completed, the tax authorities will issue either:

  • a letter stating that no defects have been found; or
  • a reassessment proposal, which will:
    • identify the rules which the tax authorities believe have not been respected;
    • state the increase in tax base; and
    • outline the applicable penalties.

Where the tax authorities suspect a company of tax fraud, they can ask a civil judge to issue a search warrant to find evidence of this fraud:

  • on company premises; or
  • at the homes of its directors.

2.5 What is the typical timeframe for the investigation?

A tax investigation generally lasts from several months to one year (or longer for complicated matters).

After the reassessment proposal has been issued (see question 2.4), the taxpayer can reply in writing within 60 days to the authorities, which must respond accordingly. The taxpayer has 30 days after receipt of this response to seize the Special Commission on Direct Taxes and Taxes on Turnover, which will render its opinion on the case, although this is not binding on the tax authorities. The taxpayer can also request a meeting with the head of the tax authorities, which is generally held a few months later. Once a decision has been rendered in writing, the taxpayer can challenge it before a senior tax officer within 30 days. After this decision has been issued, the tax authorities will issue a tax assessment notice.

If the taxpayer is not satisfied with the notice, it can challenge it before the head of the relevant tax department and in the meantime request a deferment of payment of the tax. This step is compulsory before seizing the court. The tax authorities have up to six months to take a position on the matter.

2.6 What powers do the tax authorities have in conducting their investigation, in relation to (a) the taxpayer itself, (b) its employees and (c) third parties?

During the investigation, the tax authorities can:

  • ask the taxpayer any questions they deem relevant; and
  • request the provision of any documents supporting its situation.

A specific mechanism called a ‘communication right' also exists. This enables the tax authorities to request specific documents or information from the taxpayer itself or from third parties that are enumerated restrictively by the law. These third parties include:

  • merchants in the broad sense – that is, individuals or companies that are subject to accounting obligations or artisans;
  • members of certain non-commercial professions;
  • tribunals;
  • social security institutions;
  • public administrations;
  • banks;
  • civil companies;
  • bodies paying interest or yields from securities;
  • bodies other than merchants that pay wages; and
  • bodies that collect funds from other people and manage them on behalf of these people (eg, associations or cooperatives).

The documents that can be requested are also enumerated by law, depending on the person being interrogated. Refusal to submit an information or a document is punishable by a €10,000 fine for each demand which was not answered.

The tax authorities can also make requests of other people, notably employees, but they are not legally bound to answer and are not at risk of a fine if they do not.

Moreover, the tax authorities need not inform the taxpayer that they have exercised their communication right; but if they base the tax reassessment on information obtained through this procedure, they must inform the taxpayer of the origin and content of those documents.

2.7 On what grounds, if any, can taxpayers refuse to disclose commercial information during the investigation?

Taxpayers cannot refuse to disclose commercial information. The tax authorities are bound by professional secrecy and can be subject to a fine or imprisonment if they disclose any information collected during their investigation.

However, the tax authorities cannot request information that is covered by medical confidentiality.

2.8 Can the taxpayer object to or challenge the tax investigation? Are any other avenues available for resolving the matter?

No, the taxpayer cannot object to or challenge a tax investigation.

2.9 What actions can the tax authorities take if the taxpayer does not cooperate in the investigation?

If the taxpayer refuses to allow the tax authorities to investigate or does not provide the requested accounting documents, the tax authorities will systematically evaluate the revenues to be taxed – for example, by exercising their right of communication to third parties – and apply a 100% fine of the tax due.

2.10 Can the tax authorities exercise discretion in their treatment of the taxpayer in exceptional circumstances (eg, insolvency)?

The tax authorities are generally strict in their approach, but they may:

  • agree to reduce the amount of penalties to be paid by the taxpayer in exceptional circumstances; or
  • accept payment of the tax debt in instalments.

However, where the taxpayer faces an insolvency procedure, penalties can be remitted, with the following notable exceptions:

  • the penalty applied for hidden activity (80%);
  • the penalty applied in case of bad-faith inaccuracies or omissions from the tax return (40% or 80%); and
  • the penalty applied where the taxpayer has objected to the tax investigation.

2.11 Do tax authorities have any leeway to settle in the course of tax investigations?

The tax authorities can settle in the course of tax investigations: they can consent to a rebate on the penalties applicable (although not on the tax itself) if the taxpayer commits to:

  • pay the amount claimed by the tax authorities; and
  • refrain from challenging the tax and penalties before the courts.

2.12 If the investigation concludes that taxes are overdue, what powers do the tax authorities have to collect them? Does this vary depending on the applicable tax?

If the taxpayer does not pay the overdue taxes spontaneously, the tax authorities can search for third parties that are jointly liable with the taxpayer. For example:

  • the directors of a company will be jointly liable for the tax evaded or the fine applicable if the company has distributed revenues in a hidden way; and
  • spouses will be jointly liable for the payment of income tax.

Moreover, the Treasury:

  • has a preferential right to payment before other creditors;
  • can take protective measures against a taxpayer's assets to prevent their sale;
  • can seek payment from a taxpayer's creditors; and
  • can force the sale of the taxpayer's assets.

Most taxes can be recovered through these procedures.

2.13 On what grounds are penalties imposed and how are these calculated?

Penalties are imposed where the taxpayer has failed to produce a tax return. The penalty:

  • amounts to 10% of the tax calculated according to the tax return which should have been filed; and
  • can be increased to 80% where the activity which should have been declared was hidden.

Inaccuracies or omissions found in the tax return are also subject to a fine whose rate depends on the gravity of the omission. The fine is equal to:

  • 10% of the tax debt where the taxpayer is considered to have acted in good faith;
  • 40% of the tax debt where the taxpayer has deliberately omitted revenues; and
  • 80% of the tax debt where the taxpayer has sought to mislead the tax authorities or limit their powers of investigation.

Other non-financial penalties can also be applied, such as publication on the tax authorities' website of:

  • the names of companies (although not individuals) which have committed fraud or tax evasion over a certain amount; and
  • the applicable tax penalties.

2.14 On what grounds is interest levied and how is this calculated?

If a tax debt is not paid on time, interest will be levied. This is not considered as a sanction but aims only to repair the loss suffered by the state due to the debtor's delay. It is calculated at a rate of 0.2% per month (ie, 2.4% per year) on any tax debt as from the first day of the month following that in which the debt should have been paid until the last day of the month in which the debt is paid.

Interest must be paid together with the penalties for:

  • failure to file a tax return;
  • inaccuracies in a tax return; or
  • objections to a tax audit.

2.15 What defences are typically available to the taxpayer?

The taxpayer should show that it:

  • has always acted in good faith; and
  • has not sought to avoid paying tax.

However, a claim that the taxpayer was unaware of the applicable rules is insufficient to avoid a tax reassessment or penalties.

If the taxpayer is confident that the reassessment is illegal, it can challenge it before the tax authorities by filing a claim.

2.16 Can the results of the tax investigation have criminal implications for the taxpayer? Does this vary depending on the individual taxpayer?

Where a tax investigation shows that a fraud was committed – that is, where the taxpayer has intentionally avoided or attempted to avoid the tax – the tax authorities must transfer the case to the public prosecutor if:

  • the tax evaded exceeds a certain amount (€100,000); and
  • certain penalties were applied (40%, 80% or 100%).

The tax authorities can also lodge a complaint by sending a letter to the public prosecutor in which they outline the facts constituting the criminal offence.

Once seized, the public prosecutor can decide to:

  • close the case;
  • investigate further; or
  • summon the taxpayer to appear in court.

In case of tax fraud, individual taxpayers will be subject to:

  • imprisonment for up to five years; and
  • a fine of up to €500,000.

In case of aggravating circumstances, the penalties can be increased to:

  • up to seven years' imprisonment; and
  • a fine of up to €3 million.

Companies are subject to fines only, which may be levied in an amount of up to 10 times the revenues generated by the tax fraud.

Other non-financial penalties may be ordered by the judge, such as:

  • publication of the judgment;
  • a prohibition against undertaking certain professions; or
  • the deprivation of civil, civic or family rights.

Other types of offences can be subject to criminal penalties, such as:

  • falsification of accounts by an accountant; or
  • a taxpayer's refusal to allow the tax authorities to investigate.

2.17 If the tax investigation has criminal implications for the taxpayer, are the answers to any of the above questions different?

Tax penalties and criminal penalties can be cumulative in the most serious cases. The seriousness is determined by:

  • the amount of tax evaded; and
  • the taxpayer's behaviour.

3 Voluntary disclosure and amnesties

3.1 Are any voluntary disclosure or amnesty programmes applicable in your jurisdiction? Does this vary depending on the applicable tax?

With regard to tax penalties, during a tax investigation and before any tax reassessment notice has been issued, a taxpayer can ask to regularise its situation spontaneously if:

  • the errors or omissions were not deliberately committed;
  • it files a corrective tax return within 30 days of receiving a demand for this; and
  • it pays the taxes due immediately.

This spontaneous regularisation will result in a 30% reduction in the late interest payable.

Furthermore, before any tax investigation is conducted, a taxpayer can regularise spontaneously errors or omissions committed in good faith which relate to a tax return that was filed on time. The corrective tax return must be filed before the end of the limitation period for tax investigations. If this procedure is respected, the late interest due will be reduced by 50%.

The tax authorities can refuse such regularisations if they can prove that the taxpayer acted in bad faith.

With regard to criminal penalties, in case of fraud, the taxpayer or an accomplice may benefit from a reduction in criminal penalties if it enables the tax authorities or a judge to identify the instigator of or other accomplices in the fraud.

Moreover, a taxpayer prosecuted for fraud can avoid a trial if it:

  • acknowledges the facts; and
  • accepts the penalties proposed by the public prosecutor (ie, pleads guilty).

In this case, the judge should be more indulgent.

4 Forum for tax disputes

4.1 In what forum(s) are tax disputes heard in your jurisdiction? Is there any choice of forum available?

All tax disputes must initially be brought before the tax authorities. The competent authorities are those located in the area where the taxpayer is based. There is a special body with competence for big companies. Only if a dispute cannot be resolved with the tax authorities can the taxpayer bring the dispute to court.

4.2 Who is the fact finder in a tax dispute? Does this change based on venue?

A taxpayer that wishes to challenge a tax assessment must evidence the facts on which it is relying to defend its position. The tax authorities will then analyse the documents provided and compare them to the facts of which they are aware. If they are seized, the head of the inspector and then the head of another tax department can examine the evidence of each party.

5 Filing a tax dispute

5.1 What is the limitation period for filing a tax dispute in your jurisdiction?

Taxpayers must usually file a tax dispute by 31 December of the second year following that in which:

  • the assessment notice or collection notice was issued; or
  • where no notice was issued, the tax was paid.

With regard to local taxes, taxpayers must file a tax dispute by 31 December of the year following that in which the assessment notice or collection notice was issued.

5.2 What are the formal requirements for filing a tax dispute?

There are few formal requirements for filing a tax dispute. The taxpayer can send a simple letter to the tax authorities. It is best to send a registered letter with an acknowledgement of receipt to be able to prove that the dispute was filed on time. The tax authorities have confirmed that individuals can file tax disputes directly through the dedicated government website.

5.3 What are the procedural and substantive requirements for filing a tax dispute?

The tax dispute must:

  • indicate the tax challenged;
  • summarise:
    • the facts;
    • the legal provisions invoked to challenge the tax; and
    • the conclusions; and
  • be signed by the taxpayer.

Depending on the nature of the tax challenged, the tax dispute must be accompanied by:

  • the tax assessment;
  • the collection notice; or
  • proof of payment.

The taxpayer can file the dispute itself or through an attorney.

If the tax dispute does not comply with the procedural requirements, it is possible to:

  • regularise on receipt of a request to do so by the tax authorities; or
  • submit another dispute if the limitation period has not yet expired.

5.4 Is there any possibility for collective proceedings (eg, involving several taxpayers or multiple tax assessments)?

Only restrictively enumerated taxpayers can file a tax dispute together – that is, taxpayers which are jointly liable for the same tax, such as:

  • joint owners of real estate for the payment of property tax; or
  • members of a transparent partnership for the partnership's taxes.

5.5 Must the sum in contention be paid into court before a tax dispute is filed?

In any event, the sum in contention must be paid by the taxpayer to the Treasury before the legal deadline. If the dispute is filed before the legal deadline to pay the tax, the taxpayer should ensure that it still respects the legal deadline, even if the tax authorities have not yet replied. Late interest or a penalty for late payment could otherwise apply if the tax authorities subsequently reject the dispute.

5.6 Has the filing of a tax dispute any effect on the payment of tax or the collection possibilities for the authorities?

On filing a tax dispute, the taxpayer may request a suspension of payment, but only if:

  • the legal deadline to pay the tax has not yet expired; and
  • the dispute indicates clearly the amount of the requested tax deferment.

If the tax deferment requested exceeds a certain amount, the taxpayer must provide security for payment of the tax, such as:

  • a bank guarantee; or
  • a mortgage on business assets.

As from the date of filing of the dispute, the Treasury cannot seek payment of the tax. However, if the Treasury considers that the security provided is insufficient, it may prevent the taxpayer from disposing of some of its assets to secure its debts until the tax authorities have ruled on the dispute.

5.7 If the tax dispute is decided in favour of the authorities, is late interest due if the tax has not been settled? If the tax dispute is decided in favour of the taxpayer and the tax had already been settled, is interest due by the state?

If the tax dispute is decided in favour of the tax authorities, late interest calculated as from the date on which the tax should have been paid will be due by the taxpayer. This is why a request for a payment suspension may be risky. On the contrary, if the tax dispute is decided in favour of the taxpayer, late interest calculated as from the date of payment will be due by the state.

6 Disclosure and privilege

6.1 What rules apply to disclosure in your jurisdiction? Do any exceptions apply?

The concept of disclosure does not exist as such in French law. Disclosure is entirely voluntary:

  • The parties must provide all documents supporting their claim to the court; and
  • These documents should be communicated to the opposing parties.

6.2 What rules on third-party disclosure apply in your jurisdiction?

The tax authorities can request certain third parties enumerated by law to communicate documents that can be used as evidence during the proceedings (see question 2.6). The court can also decide to:

  • open an investigation and gather testimonies from third parties in this respect; or
  • appoint an expert to check the facts and figures in dispute, who can also gather testimonies from third parties.

6.3 What rules on privilege apply in your jurisdiction?

When auditing a professional who is subject to privilege or more generally to professional secrecy (eg, an attorney or a doctor, the tax authorities:

  • may request all information relating to the amount, date and form of revenues paid by the professional; but
  • may not request information relating to the nature of the service provided.

If information which is subject to professional secrecy is disclosed, the tax investigation procedure is illegal and the tax cannot be reassessed.

Lawyers' professional secrecy is general, absolute and unlimited in time and clients cannot release their lawyers from this obligation. However, a client can communicate a document that is covered by professional secrecy (eg, any document and communication exchanged with their lawyer, whether physical or electronic) in the interest of its defence.

7 Evidence

7.1 What types of evidence are permissible in tax disputes in your jurisdiction? Is expert evidence accepted?

All types of evidence are permissible. Generally, as the tax proceedings take place in writing, oral testimonies are not possible. However, attestations or certificates can be produced.

The court can appoint an expert to check the facts or figures in dispute, who can also gather testimonies under conditions determined by the court.

In some cases, if documents have been obtained illegally by the tax authorities, these documents cannot be used as evidence.

7.2 What is the applicable standard of proof?

French law does not provide for a standard of proof as such in tax matters. The judge must form a conviction based on all documents provided by the parties. The case law can provide guidance on the elements regarded by judges as evidencing certain situations.

7.3 On whom does the burden of proof rest?

The taxpayer and the tax authorities should both present elements that evidence their position.

In some situations, the burden of proof systematically rests on the tax authorities. For example, the tax authorities must:

  • present elements concerning:
    • the taxpayer's situation;
    • the applicable tax regime;
    • the nature of the taxpayer's revenues; and
    • the nature of an act where the qualification given by the taxpayer is challenged; and
  • evidence the bad faith of the taxpayer or the existence of fraudulent actions.

Meanwhile, the taxpayer must prove:

  • that it has complied with the necessary formalities – for example,
    • the tax returns were filed on time; and
    • the option for the application of a specific regime was exercised; and
  • actual expenses that were deducted from its taxable income.

In some cases, presumptions may apply in favour of the tax authorities and the burden of proof will thus rest with the taxpayer. For example, if a company does not have regular accounts, it is presumed that the expenses are not made in the business' interest. The company will then need to prove that the expenses were made in the business' interest and are deductible of its taxable income.

8 Proceedings

8.1 Are tax proceedings in your jurisdiction public or private? If the former, are any options available to the parties to keep the proceedings or related information confidential?

Tax hearings before the court are public. However, the judge can decide to hold a closed hearing in order to:

  • protect public order;
  • respect privacy; or
  • respect secrets protected by law.

The judge's decision is public and anyone can request a copy thereof. Moreover, all decisions of the French courts are now available online, but no personal data can appear relating to natural persons in order to protect the right to privacy.

8.2 How do the proceedings unfold in your jurisdiction?

If the tax authorities render an unfavourable decision, the taxpayer can submit a request for review to court within two months. However, if the tax authorities have not replied within six months, the taxpayer can submit its request immediately. The request should contain:

  • all of the taxpayer's arguments;
  • the tax assessment; and
  • all evidence which supports its request.

8.3 What is the typical timeframe for proceedings?

Following the taxpayer's request, the tax authorities can produce a statement of defence to respond to the taxpayer's arguments. The taxpayer can also respond to this statement. No exchange of written statements is possible after the court decides to close the investigation. There is no time limit for the duration of the investigation phase. The court then convenes the parties for a hearing and renders its judgment a few weeks to a few months later. The law states only that the judgment must be rendered within a reasonable time.

The judgment can be appealed before a court of appeal and ultimately before the Supreme Court. Each step can take between one and three years but no timeframe is provided for by the law; it need only be reasonable.

8.4 Are settlements possible between the taxpayer and the tax authorities once judicial proceedings have been opened?

Yes, settlements are possible with the tax authorities even once the judicial proceedings have been opened.

8.5 Do the courts in your jurisdiction have full power to review facts and legal questions?

The administrative or civil tribunals and the administrative or civil courts of appeal can review facts and legal questions. However, the administrative and civil supreme courts can consider legal questions only.

9 Remedies

9.1 What remedies are available in tax disputes in your jurisdiction?

If the tax authorities have made a mistake in assessing the tax due, the court can:

  • condemn the state to pay late interest on the sums unduly paid, calculated as from the date of payment; and
  • grant the taxpayer a sum aimed at covering the expenses it incurred during the proceedings.

9.2 What factors will the court consider in deciding on the appropriate remedies?

The court will decide to award remedies according to equity or the taxpayer's economic situation. The court may also decide that there is no need for remedies.

10 Appeals

10.1 Can the decision of the court be appealed? If so, on what grounds and what is the process?

If it is not satisfied with the decision of the court, the taxpayer can appeal within the following timeframes:

  • A decision of a civil tribunal must be appealed within one month;
  • A decision of a criminal tribunal must be appealed within 15 days;
  • A decision of an administrative tribunal must be appealed within two months; and
  • A decision of an administrative or civil court of appeal must be appealed within two months before the relevant supreme court (the Council of State for administrative matters or the Court of Cassation for civil and criminal matters).

11 Costs, fees and funding

11.1 What costs and fees are incurred in tax disputes in your jurisdiction? Can the winning party recover its costs?

No fees are incurred, except for possible legal consultancy fees where the dispute is discussed with the tax authorities prior to the commencement of court proceedings.

Before the courts, special stamp duty must be paid in the form of a fixed contribution (between €35 and circa €200, depending on the court), together with fees to register the case with the tribunal.

Before the supreme courts, the taxpayer must be represented by special counsel with the sole right to practise before these bodies.

The court can condemn the state to reimburse the costs incurred by the taxpayer during the proceedings.

11.2 Are contingency fees and similar arrangements permitted in your jurisdiction?

In France, attorneys cannot base their fees exclusively on the results obtained before the tax authorities or the courts. However, they can request a fee which is composed of:

  • a fixed amount; and
  • an amount that depends on the taxes saved.

11.3 Is third-party funding permitted in your jurisdiction?

This is not relevant for French tax purposes.

12 International tax disputes

12.1 What is your jurisdiction's position on the resolution of international tax disputes (eg, advance pricing agreements, mutual agreement procedures, arbitrations)?

French law provides for an advance pricing arrangement procedure. French or foreign companies can seek agreement from the tax authorities on the appropriate transfer pricing methodology for future transactions with related entities. This arrangement can be:

  • unilateral, in which case it concerns only the French tax authorities and the taxpayer; or
  • bilateral, in which case it is negotiated between the French tax authorities and the foreign tax administration.

If an agreement is reached and the taxpayer accepts it, the taxpayer is assured that the signatory tax administrations may not challenge the transfer pricing policy during the period covered by the arrangement on the basis of its terms and conditions.

Moreover, France has concluded a number of bilateral tax conventions, more than 120 of which contain mutual agreement procedures. Similarly, a number of tax conventions provide for arbitration if the tax administrations cannot reach mutual agreement.

12.2 Has your jurisdiction implemented the Organisation for Economic Co-operation and Development (OECD) minimum standards with respect to international tax dispute resolution or is it a party to other agreements in this respect?

Yes, France has implemented the OECD minimum standards with respect to international tax dispute resolution as a signatory to the Multilateral Convention. It is also a signatory to European agreements regarding tax dispute resolution. In this regard, France reserves the right to exclude a case from the Multilateral Convention if it is also eligible for European tax dispute resolution.

12.3 Does your jurisdiction's position differ significantly from Article 25 of the OECD Model Tax Convention (including commentary)? If so, in what respects?

France's position is in line with Article 25 of the OECD Model Tax Convention. It has just refused the commentary, stating that the reasons for which contracting states refuse the use of the Mutual Agreement Procedure (MAP) – notably regarding double taxation cases accompanied by substantial penalties – must be specified in the convention.

Also as regards the Multilateral Convention, France has reserved the right to exclude certain cases from the procedure – for example:

  • cases:
    • for which the taxpayer is subject to an administrative or criminal penalty for tax fraud;
    • involving wilful omission; or
    • involving a serious breach of declarative obligations; or
  • cases for which the tax base is lower than €150,000 on average per fiscal year.

France has also reserved the right to extend the delay provided for in the Multilateral Convention for the tax administrations to a reach a mutual agreement from two to three years.

France has further indicated that it could reserve the right to indicate in its tax treaties that no question arising from a case submitted to the MAP will be subject to international arbitration if a tribunal from one or other contracting jurisdiction has already rendered a decision on this question.

12.4 How do domestic and international tax dispute resolution mechanisms interplay in your jurisdiction?

A taxpayer can initiate:

  • a procedure before the tax authorities or the court; and
  • at the same time, the MAP.

If the tax authorities reach a mutual agreement with the taxpayer before a decision has been issued by the court, the agreement can apply only if the taxpayer withdraws its claim in order to avoid any conflict. If the court renders its decision before a mutual agreement has been reached, the agreement cannot worsen the situation of the taxpayer according to the French administration doctrine.

In some situations, the French administration can deny the taxpayer the ability to request the MAP – for example, where:

  • the taxpayer cannot prove that it was subject to double taxation; or
  • the application of the provisions triggering the double taxation was accompanied by substantial penalties.

The arbitration procedure is an extension of the MAP. It can be requested by the taxpayer if the tax administrations have not reached agreement after two years minimum (three years in the case of certain tax treaties signed by France), so that a solution is found on the question raised.

13 Trends and predictions

13.1 How would you describe the current tax dispute landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The French tax authorities are strengthening their capacity to combat tax fraud. The government has announced that it wishes to:

  • employ more tax inspectors (1,500 by 2027); and
  • increase the budget allocated to the modernisation of digital tools to facilitate the detection and combating of tax fraud – notably through the intensification of data collection methods.

The tax authorities are also sending more information requests to taxpayers and third parties.

Moreover, in 2023:

  • tax audits on high-income taxpayers increased by 25%; and
  • the number of contributions assessed following tax audits reached an all-time high.

The government has further announced that it will seek to combat international tax optimisation and abusive transfer pricing policies of multinational corporations.

In the meantime, the government is encouraging taxpayers to regularise their situation by granting rebates on incurred penalties in application of the principle of the ‘right to make a mistake'.

14 Tips and traps

14.1 What would be your recommendations to parties facing a tax dispute in your jurisdiction and what potential pitfalls would you highlight?

When faced with a tax dispute, taxpayers should:

  • seek professional advice from a tax lawyer; and
  • cooperate with the tax authorities – failure to provide documentation or information will raise suspicions.

Where an issue is raised during a tax audit, the taxpayer should avail of the opportunity to regularise its situation before a reassessment notice is issued in order to mitigate the applicable penalties.

Finally, the deadlines for responses should be respected rigorously in order to avoid penalties.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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