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What are the penalties for filing a late tax declaration in France?

The sanctions for being late with your French tax declaration can be costly - but in some cases, can be avoided.

Published: 11 June 2022 13:21 CEST
Updated: 7 June 2023 09:50 CEST

What are the penalties for filing a late tax declaration in France?

Photo by DENIS CHARLET / AFP

The annual French income tax declaration must be completed by almost everyone living in France – even those who do not have income here.

The final deadline in 2023 is 11.59pm on Thursday, June 8th for people living in départements 55-96 and France’s overseas départements – deadlines for the rest of France and for people who file their declaration on paper have already passed.

Meanwhile, property owners must this year complete a new property tax declaration – the deadline for that is June 30th.

EXPLAINED How to file your French property tax declaration

Penalties

If you are late to file your income tax declaration (déclaration des impôts), you will generally be sent a letter known as a mise en demeure, which has to be signed for upon delivery. This letter will instruct you to submit your tax return as soon as possible and state the potential penalties incurred, should you fail to do so.

The amount varies according to how late you are.

If you were late to file your tax return but didn’t receive/sign for a mise en demeure, you will need to pay an extra 10 percent on top of your final tax bill.

If you file your tax return less than 30 days following the reception of a mise en demeure, you will need to pay an extra 20 percent on top of your final tax bill.

If you file your tax return more than 30 days following the reception of a mise en demeure, you will need to pay an extra 40 percent on top of your final tax bill.

Other penalties

The service-public website advises that a 0.2 percent monthly interest rate can be applied in the case of late payment.

There are also a range of penalties unrelated to late payment.

If French tax authorities discover that you have failed to declare a revenue stream, you could have to pay an extra 80 percent on top of your normal tax bill.

The maximum penalty for personal tax fraud in France is a €3m fine and seven years imprisonment.

France has dual taxation agreements with countries including the UK and USA, so if you have already paid tax on income in another country you won’t need to pay more tax in France – but you still need to declare it.

Another item that frequently catches out foreigners in France is overseas bank accounts.

If you have any non-French bank accounts, you need to list them on your tax declaration, even if they are dormant or only have a very small amount of money in them.

This also applies to any foreign investment schemes you have, such as life insurance policies.

The penalty for not listing accounts is between €1,500 and €10,000 and that applies for each account you fail to declare.

Exceptions

If you had an inkling that you may have to declare your earnings in France, then chances are you probably do.

You need to file a tax return if:

You live in France (even if your income comes from another country, e.g. pensioners)
You work in France
You live outside of France but earn income here, by renting out a property for example.

If one of these situations applies to you, but you have still not filed your return, it is best to reach out to the tax authorities before they reach out to you. You could plead that you forgot the deadline in “good faith” if you had a legitimate reason (serious illness, a death in the family etc.). If this is the first time that you have declared a late tax return, it is possible that the penalties won’t be enforced.

If you declare your taxes online, you can use the messaging space available via impots.gouv.fr.

You can also call +33 8 09 40 14 01 to reach the government’s tax hotline Monday-Friday between 9h30 and 19h.

Non-French speakers can try calling the following number: + 33 1 72 95 20 42.

Every town has a local tax office, where you can simply turn up without an appointment and ask for help.

What if I made a mistake on my declaration?

In 2018 France formally enshrined the ‘right to make mistakes’, in dealings with the authorities, giving people the right to go back and correct their declarations without attracting a penalty.

So if you realise you have missed something off or added the wrong information, you can either go back into your online declaration and correct it or, if you file on paper, visit your local tax office.

However the ‘right to make a mistake’ does not extend to late filing.

Property tax declaration

The déclaration d’occupation for property owners is more straightforward – missing the June 30th deadline incurs a €135 fine.

The declaration is a one-off this year, you won’t need to complete it every year, but must make a new declaration if your circumstances change – ie if you buy a new property or if the occupation status changes – for example a second home becomes your main residence or if you begin letting out your second home on a long-term basis.

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URSSAF: What is it, how it works, and how it affects you

Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales – more usually known, because that’s a mouthful, by the acronym Urssaf – are the administrators who collect social security contributions that fund a large part of France’s labyrinthine social security system, including, notably, health insurance.

It is responsible for collecting some €534.4 billion from 9.8 million users every year to help fund social security in France.

If you’re an employee in France, you will probably have nothing directly to do with Urssaf, because – for the most part – dealing with it will fall into the realms of Somebody Else’s Problem (ie your employer).

But if you are freelance, a contractor or set up your own business you will almost definitely have to deal with Urssaf.

Type of regime

Many people working for themselves in France use the simplified Micro Entrepreneur regime – often still referred to as auto entrepreneur – which sets up a basic sole trader-style business.

Its advantage is (relative) simplicity but it has limits on earnings as well as other limitations like being able to write off business expenses.

Micro-entrepreneur: How to set up as a small business in France

Other options for freelancers or sole traders include the Entrepreneur individuel à responsabilité limitée (EIRL – basically a limited liability sole trader); Entreprise unipersonnelle à responsabilité limitée (EURL – another sole trader option), Société par Actions Simplifiée Unipersonnelle (SASU); or Société à Responsibilité Limitée (SARL).

These allow for higher earnings but are more complicated and may require an accountant to set up.

If you start off as a micro-entrepreneur but then your earnings go over the threshold you can switch to another regime without attracting a penalty.

How to register

These days the whole registering a business thing can be done online. For a simple micro enterprise, you can create an account on autoentrepreneur.urssaf.fr, then give details of the business you intend to run, and your social security numbers.

If you’re looking to set-up a more complex business structure such as a EURL, SARL, SASU, or SAS, you should start with the portail e-procédures at procedures.inpi.fr.

You must then send off the declaration, which is registered with the relevant Centre de formalités des entreprises;

For commercial businesses eg shops or bars, this is the Chambre de commerce et d’industrie;
For artisans, craftspeople, tradespeople and some other commercial businesses, it is with the chambre de métiers et de l’artisanat;
For professions libérales – including, for example, freelance journalists – it is with Urssaf.

Within 15 days of registration, you should receive your business registration number, known as the SIRET number.

Notice that you have been signed up to the relevant social security regime should follow in a few weeks.

Since 2020, all independent workers belong to the Assurance Maladie health regime, and a few professionnels libéraux are signed up to the standard Assurance retraite for their pensions.

How much does it cost to set up a business?

That depends on your business. Setting up as a micro entrepreneur (auto entrepreneur) costs nothing administratively and is the simplest way for freelancers to set up for themselves.

Technically speaking it is a tax status rather than a business structure.

Then what?

Once you’re up and running, the most regular contact with Urssaf should be when you file your earnings online, which – for micro entrepreneurs – can be done monthly or quarterly using the auto entrepreneur website.

You will then be informed how much you owe in cotisations, (social security contributions) which will be taken out of your bank account around a month later.

If you have a French-incorporated business, such as EURL, SARL, SAS or SASU, you will use URSSAF’s main website www.urssaf.fr, or get your accountant to do so. Some business set-ups in France require you to use an accountant.

Banks

Note that you will need to set up a dedicated bank account for your business. As a micro entrepreneur, despite claims from banks, it does not have to be a business account (which attract larger fees). But it should be separate from your personal bank account, and just used to pay your charges, for any business expenses (which you cannot claim for, if you’re a micro entrepreneur).

Other business regimes, such as the Entrepreneur individuel à responsabilité limitée (EIRL – basically a limited liability sole trader); Entreprise unipersonnelle à responsabilité limitée (EURL – another sole trader option), Société par Actions Simplifiée Unipersonnelle (SASU); or Société à Responsibilité Limitée (SARL), have certain advantages on allowable earnings, compared to the very basic micro-entrepreneur regime – but will incur a sliding scale of charges on set-up, and require different book-keeping and accounting systems. Some will also require you to be registered for VAT.

Do I need an accountant?

This is really a personal choice – the micro-entrepreneur regime is designed to be simple and to be used by individuals, but some people still prefer to use an accountant.

The business structures for higher earners are a little more complicated and may require an accountant to set up. Most people use accountants if they are within these structures, unless they are confident in both their French and their book-keeping abailities.

If you have an accountant you can nominate them to be your representative in any dealings with Urssaf, although note that you are still responsible for any fees and charges, even if they are incurred by your accountant making a mistake.

Okay — how much do you pay in charges?

For micro-entrepreneurs, social charges can be paid monthly or quarterly. They are calculated as a fixed percentage of your earnings, depending on the type of work.

Rates are 12.8 percent for the sale of goods, 22 percent for artisanal and commercial services, 22 percent for professions libérales attached to the standard Assurance Retraite for retirement, and 22.2 percent for a small number of professions libérales attached to Cipav.

A levy of 0.1 percent to 0.3 percent is also charged. It goes to the CPF fund giving all workers the right to a financial contribution for training.

Note, micro-entrepreneurs are limited in the amount they can earn: for business activities and the supply of accommodation (hotels, bed and breakfasts, rural cottages classified as furnished apartments, furnished apartments), the threshold is €188,700.

For service and professional activities, the threshold is €77,700.

Micro entrepreneurs will be obliged to step up to another business regime if they break these earnings thresholds.

For other business types, these maximum earnings thresholds do not exist, but bosses will have other requirements, for example, they may need to use the services of an accountant, and will have to be audited once they cross a certain earnings threshold.

Taxes

It’s important to note that Urssaf deductions are only part of the story – there are also other taxes to consider.

Personal income tax is covered in the annual income tax declaration, while businesses taxes fall under a range of tax regimes, depending on your type of business.

Commercial, industrial, or manual/trades/crafts businesses fall under the Bénéfices Industriels et Commerciaux (BIC) system. Professional businesses fall under the Bénéfices non Commerciaux (BNC) system. Agricultural businesses use the Bénéfices Agricole (BA) system.

Don’t forget, either, the Contribution Fonciere des Entreprises (CFE) property levy, a local tax payable by any company or self-employed person earning more than €5,000 per year, even if they conduct their business at home, at the kitchen table. This one is due every December.

What if I have a problem?

You can contact Urssaf staff online via the website, or arrange an appointment for a face to face meeting at their offices, if you prefer. Contrary to popular opinion, they’re there to help you.

Urssaf, in the past, had a poor reputation. But, as with all French bureaucracy, it’s better to work with it rather than try to fight or resent it.

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