Regularising undeclared foreign accounts and assets
Undeclared foreign account or policy: fines, extended assessment period, criminal exposure, and how a regularisation is conducted.
Contents
The situation
An account opened during a posting abroad and never closed. An inheritance received in another country. A life policy taken out in Luxembourg. A portfolio of digital assets on a foreign platform.
In almost every case there was no intention to conceal: there was a reporting duty nobody mentioned. The difficulty is that the law does not treat ignorance as an excuse, and that automatic exchange of information between administrations has made discovery a matter of time.
What the rules say
| Duty | Scope |
|---|---|
| Reporting of foreign accounts | each account, each year, including dormant ones (article 1649 A of the tax code) |
| Reporting of foreign life insurance policies | same principle |
| Fine for failure to report | per undeclared account and per year |
| Assessment period | extended to ten years where foreign assets have not been reported (article L169 of the tax procedure code) |
| Presumption | sums transferred to or from an undeclared account may be presumed to be taxable income |
Beyond that, undeclared foreign assets are among the circumstances that aggravate the offence of tax fraud.
What the firm does with those rules
A regularisation follows a precise order, and that order determines its cost.
First the inventory: which accounts, since when, funded how, producing what income. The origin of the funds is the heart of the file: an inheritance, savings already taxed, undeclared income. Each origin is treated differently.
Then the computation: tax due over the assessable period, social levies, late payment interest, surcharges and fines, with the choices the law allows.
Then the filing: amended returns and a written statement, complete, which serves as a request for leniency on the surcharges. A partial regularisation discovered afterwards produces the opposite of the intended effect.
Finally the protection: carried out before any audit and before any formal notice, the step is voluntary, and it is that voluntary character which keeps the matter out of the criminal courts.
Frequently asked questions
Must a foreign account be reported even without income?
Yes. The duty attaches to the existence of the account, not to its yield.
Can the authorities go back more than three years?
Yes, up to ten years where foreign assets have not been reported.
Is there still a dedicated regularisation service?
The dedicated unit has been closed. Regularisation now goes through the ordinary channel, which makes the presentation of the file all the more decisive.
What is the real exposure?
The tax, late payment interest, a surcharge, and a fine per account and per year. Criminal exposure exists and depends on the amounts and on the conduct. That is precisely what a voluntary regularisation neutralises.
This article sets out a general framework and is no substitute for a review of your file: every situation has its own dates, figures and documents.