20240124-KPMG_Global-France_–_Penalties_Calculated_on_Annual_Tax_Liability,_Not_Balance_of_Tax_Due_3页_321kb

Summary of Tax Penalty Ruling

The French Council of State (Conseil d'État), the highest administrative court, issued a ruling on penalties for failure to file an annual income tax return. Specifically, the court ruled that penalties must be based on the tax amount shown on the assessment, without deducting any advance payments or withholdings.

Key Rulings:

• Penalties for late filing or non-filing are not reduced by net payments; they are calculated solely on the assessed tax amount.
• Penalty rates:
  • 10% if a return is filed after a formal notice or within 30 days of the deadline.
  • 40% if no return is submitted within 30 days of a formal notice.
  • An additional category, 80%, applies to cases involving hidden or undeclared activities.

Implications:

• This ruling serves as a strong deterrent, emphasizing that penalties can be severe even if the net tax liability is minimal.
• Employers and employees, particularly those subject to cross-border relocations and tax equalization, must ensure timely and accurate tax filing to avoid substantial fines.
• Recommended actions include seeking advice from tax professionals or KPMG's Global Mobility Services team for compliance in complex situations.

Note on Litigation:

• Further judicial review in administrative courts is unlikely, but recourse via the European Convention on Human Rights is possible though lengthy.

For further details or assistance, refer to the Contacts section or consult KPMG Avocats.