Budget: the tax litigation bill is on the rise

The cost of serial litigation is estimated at 2.35 billion euros for 2020. After the 3% tax on dividends two years ago, the State suffered new convictions which will require it to reimburse taxpayers.

Since the case of the 3% tax on dividends, which had forced the State to urgently reimburse 10 billion euros to companies, serial tax disputes are closely followed by parliamentarians.

It is now a line of the state budget closely monitored by parliamentarians. Since the case of the 3% tax on dividends, which forced the State to urgently reimburse 10 billion euros to companies two years ago, the so-called serial tax disputes have been the subject of a particular attention. The report by Socialist MP Christine Pires-Beaune, published on the occasion of the debate on the finance bill for 2020, shows that the subject is far from closed, even after the end of reimbursements linked to the invalidation tax at 3%.

In 2020, the cost of these disputes should start to rise again. Their amount is estimated at 2.35 billion euros in the finance bill. This is an estimate from Bercy which, more often than not, is conservative. For the year 2019, the forecast entered in the budget amounted to 1.28 billion euros. It has been revised downwards to 765 million as some expected repayments will not be as high as expected this year.

Opening of new disputes

If this figure worries, it is because it reflects new convictions forcing the State to reimburse taxpayers. The Withholding Tax case, finally settled after fifteen years (!) Of twists and turns, should cost the budget 1.1 billion in 2020. In October 2018, France suffered a final judgment from the Court of Justice of the European Union ( CJEU), which will finally pave the way for refunds for taxpayers. Another litigation, on UCITS, continues to weigh several hundreds of millions of euros each year. In 2020, another 900 million euros were provisioned.

Other cases, of smaller sizes, have recently materialized, such as that on the CSPE or withholding taxes suffered by life insurance companies (around 200 million euros each).

High default interest

In addition to overpaid taxes, the State must reimburse default interest to injured taxpayers. We are not talking about a small sum, since from 2012 to 2017 the cumulative cost of this interest associated with tax disputes reached 2.55 billion. It must be said that in this environment of negative interest rates, an illegal tax can be a good investment for taxpayers. Until 2017, the rate of default interest was still 4.8%. In 2018, learning from the 3% tax, Parliament halved this rate to 2.4%.

Despite this decrease, the cost of these default interest should remain above 1 billion euros in 2020, after an amount revised upwards to 1.7 billion for the year 2019.

In this uncertain context, the deputy Christine Pires-Beaune passed an amendment requiring the government to inform the Assembly’s finance committee every six months on the budgetary risks of tax disputes over 200 million euros.

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