What Happens During a Tax Audit in France? Part 2: The Collection of Reassessed Taxes as Seen by a French Tax Lawyer

After the tax audit phase is completed, and following any observations submitted to the audit department or appeals to higher authorities, the tax administration will decide whether to uphold all or part of the initial tax reassessments or to abandon them.

If the reassessments are maintained in full or in part, tax notices for income tax or corporate tax and VAT reassessments (AMR) will be issued, making the amounts due immediately payable.

It’s crucial to act quickly upon receiving these notices, as the sums are generally due immediately. Failure to respond in time can lead the French tax authorities to take swift action to enforce collection, such as bank account seizures, wage garnishments, and other collection measures.

At this stage, the file is transferred from the audit department to the tax collection department, such as the Personal Income Tax Department (DIP), the Corporate Tax Department (DIS), or the Specialized Collection Unit for debts considered high-risk or involving large amounts (PRS).

During this phase, your contacts within the tax administration will no longer be the same officials who conducted the audit.

If you have handled the audit on your own up to this point, now is the time to seek the assistance of a French tax lawyer with expertise in tax law. Their guidance can be crucial in evaluating and managing a situation that could have serious financial implications.

This assessment must be conducted objectively.

If the tax administration’s reassessments are justified and follow proper procedures, it may be advisable to negotiate either a reduction in penalties or request a tax remission.

It’s important to note that the legal consequences of these actions differ: entering into a settlement means the taxpayer must forfeit their right to challenge the reassessed taxes.

In some cases, a payment plan can be negotiated to spread out the tax liability over time.

If, after consulting with your tax lawyer, it becomes clear that the tax notices are partially or wholly excessive or contestable, and there are legal grounds to oppose the administration’s approach, the situation may move into the litigation phase. This phase involves formally requesting a full or partial cancellation of the taxes reassessed during the audit.

Founded in 2007, CM-Tax is a French law firm with tax experts based in Lyon and Marseille, offering nationwide assistance. We are ready to support you through this complex and delicate phase.