Tax Fraud and Criminal Tax Lawyers in Paris

Error, deliberate failure, abuse of law, fraud: distinct characterisations

Not every reassessment is fraud. French tax law distinguishes several degrees of seriousness, each attracting a different penalty. A good-faith error only carries late-payment interest. By contrast, inaccuracies or omissions in a return carry a 40% penalty for a deliberate failure, 80% for abuse of law (reduced to 40% where the taxpayer neither took the main initiative nor was the main beneficiary), and 80% for fraudulent manoeuvres (Article 1729 of the French Tax Code, Code général des impôts, CGI).

The criminal offence of tax fraud belongs to a different register: it punishes anyone who has fraudulently evaded, or attempted to evade, the assessment or payment of tax, in particular by deliberately failing to file, deliberately concealing part of the taxable amounts or organising their own insolvency (Article 1741 CGI). It requires intent. The penalty chosen by the tax inspector is therefore never neutral: it is often what opens, or closes, the criminal route.

How does a tax case become a criminal case?

Two routes coexist. The first is automatic: the tax authorities must report to the public prosecutor any facts that led, on tax exceeding €100,000, to the 100% penalty, the 80% penalty for fraudulent manoeuvres, abuse of law or undisclosed activity, or the 40% penalty where it is a repeat within the previous six years (Article L. 228 of the Tax Procedure Code, Livre des procédures fiscales, LPF). The threshold is assessed when the tax is formally assessed or, where a settlement is reached, at the stage of the last financial consequences notified. This mechanism does not apply to a taxpayer who has spontaneously filed a corrective return.

The second route is a complaint by the tax authorities, filed for other facts with the binding opinion of the tax offences commission (commission des infractions fiscales). The taxpayer is notified when the commission is seized and has thirty days to submit observations. No opinion is required where strong presumptions and a risk of evidence being lost relate to foreign accounts, foreign interposed entities, false documents or a sham foreign tax residence.

Our view is consistent: the best criminal defence starts before the file leaves the tax authorities. Challenging the characterisation of fraudulent manoeuvres, disputing the amount of tax, producing the right evidence at the right time or negotiating a settlement can bring a case below the mandatory reporting thresholds, or deprive the authorities of the elements on which a complaint would rest.

Searches and seizures

Where the tax authorities suspect purchases or sales without invoices, false invoices or inaccurate or fictitious accounting entries, they may obtain from the liberty and custody judge (juge des libertés et de la détention) authorisation to search any premises, including private ones, and seize documents on any medium (Article L. 16 B LPF). The order mentions the right to call on counsel. It may be challenged before the first president of the court of appeal within fifteen days, as may the conduct of the operations. These time limits are short, and arguments based on irregularities in the search must be prepared immediately.

What penalties apply, and how do they combine?

Tax fraud is punishable by five years' imprisonment and a €500,000 fine, which may be increased to twice the proceeds of the offence. The penalties rise to seven years and €3,000,000 where the offence is committed by an organised group or facilitated by foreign accounts or entities, false documents, a sham foreign tax residence or a fictitious transaction. Additional penalties include the loss of civic, civil and family rights and publication of the judgment.

Criminal sanctions are added to tax penalties. The French Constitutional Council has allowed this cumulation subject to three reservations: the offence must target only the most serious cases of concealment, a taxpayer discharged from the tax on the merits by a final decision cannot be convicted of tax fraud, and the total amount of sanctions may not exceed the highest of the sanctions incurred (Constitutional Council, 24 June 2016, No. 2016-545 QPC). The second reservation underlines the importance of tax litigation: obtaining a discharge before the tax court closes the door to a criminal conviction.

For legal entities, the public prosecutor may offer, before criminal proceedings are initiated, a judicial public interest agreement (convention judiciaire d'intérêt public), whose performance extinguishes the prosecution without any finding of guilt (Article 41-1-2 of the Code of Criminal Procedure). Directors remain personally liable.

Our role

During the audit. We act from the first exchanges with the tax inspector, and in any event as soon as a 40%, 80% or 100% penalty is contemplated. The aim is to contain the characterisation of the facts, dispute the tax and, where appropriate, negotiate a settlement before formal assessment. Our audit and litigation practice is set out on our tax litigation page.

Before any audit. A corrective return filed spontaneously rules out the automatic referral to the prosecutor. For undeclared assets held abroad, voluntary disclosure remains the safest route; it is set out on our voluntary disclosure of foreign assets page.

When the case becomes criminal. We work with a criminal defence lawyer, who conducts the defence before the criminal courts. The firm retains control of the tax side: challenging the assessments before the tax court, technical analysis of the reassessments, and coordination between the tax and criminal proceedings. This division of roles prevents a criminal defence strategy from compromising the tax litigation, or the reverse.

Our insights on tax audits and tax fraud

• French Tax Audit Targeting Algorithm: A Practitioner's Framework
• Undeclared Foreign Assets: France's 60% Levy Under Challenge
• France Announces a 2027 Voluntary Disclosure Window for Undeclared Assets
• Tax Relief Before the Hearing: When French Tax Authorities Back Down