No tax breaks for tax evaders
A taxpayer found guilty of aggravated tax fraud may be temporarily deprived of the right to claim tax deductions and credits related to the payment of income tax or real estate wealth tax. Effective January 1, 2024, a judge may also order that tax evaders be deprived of their rights to tax deductions and credits.
In order to ensure that criminal penalties serve as a stronger deterrent against taxpayers who fraudulently evade taxes, the 2024 Finance Act introduces an additional penalty consisting of temporary disqualification from receiving income tax reductions or credits or property wealth tax (IFI) reductions or credits. This suspension may last up to 3 years, beginning with the taxation of income for the year following the year of conviction.
It should be noted that tax fraud is punishable by up to 7 years in prison, a fine of 3 million euros, and a variety of additional penalties, such as the deprivation of all or part of one’s civic, civil, and family rights; a ban on practicing a professional, commercial, or industrial occupation; or the suspension of one’s driver’s license.
This measure applies to individuals convicted of the crime of tax fraud with aggravating circumstances, as defined in paragraphs 2 through 8 of Article 1741 of the General Tax Code (CGI). These circumstances include the concealment of foreign accounts, fraud committed as part of an organized criminal group, and the use of a false identity, forged documents, or a fictitious address abroad.
Only certain income tax or property tax reductions are affected
This new restriction applies to all income tax or real estate wealth tax reductions or credits, including provisions benefiting individuals with income subject to income tax in the categories of industrial and commercial profits, noncommercial profits, or agricultural profits. However, conventional tax credits intended to eliminate double taxation are excluded from the scope of this restriction.
Since this is an additional penalty, the denial of tax credits and deductions is not automatically imposed but must be ordered by the criminal court judge.
