Tax evasion: Bercy’s new wealth of information on foreign bank accounts

Since the entry into force of the automatic exchange of information, the tax authorities have received information on 3.5 million foreign accounts held by French taxpayers. 86 countries transmitted data, including Switzerland, Luxembourg and tax havens such as Panama or the Cayman Islands.

Since 2018, banks must send states the identity of the owners of bank accounts and the amount of assets on deposit.  It is then up to the tax authorities to adjust the taxpayers if the accounts have not been declared.

Tax transparency, information exchange, reporting by country … For ten years, international cooperation in the fight against tax evasion has given rise to new tools. What results do they produce, once in the hands of administrations? The annexes to the 2020 finance bill provide a first inventory, two years after the entry into force of the automatic exchange of information which signaled the end of banking secrecy. Since then, banks must send states the identity of the owners of bank accounts and the amount of assets on deposit. It is then up to the tax administrations to exchange this data and to correct the taxpayers if the accounts have not been declared.

It emerges from this report that the French administration received, in 2017 and 2018, information on more than 3.5 million bank accounts held, directly or indirectly, by French taxpayers in 67 states. This considerable amount of information has significantly increased compared to 2017 when only 1 million accounts were involved in the exchange of information. It must be said that the number of countries participating in these exchanges almost doubled between 2017 and 2018. This data is then used by the tax authorities to track down fraudsters. “Exploitation works have already made it possible to identify more than 80% of the people appearing in the files”, indicates the report.

86 countries have played the game

According to this annex to the Budget, 86 countries played the game last year, including historic areas of tax evasion, such as Switzerland or Luxembourg, but also tax havens regularly singled out by the international community ( Panama, Cayman Islands, Jersey, Guernsey, etc.). However, fourteen jurisdictions have not yet transmitted information, for technical or legal reasons. There are Russia, Turkey, Qatar, Israel, as well as exotic destinations such as the Marshall Islands, Vanuatu, Antigua and Barbuda.

This volume is without comparison with the exchanges on request, precursors of the automatic exchange, and which amounted each year to a few thousand requests. In 2018, France sent 4,745 direct tax requests, a figure up 30%. The three main recipient countries (Luxembourg, Switzerland and the United Kingdom) represent a little less than half of the requests. And the delays are long to obtain an answer: from 5 to 8 months for these three countries.

A central register for “rulings”

The report reviews other mechanisms adopted in response to tax scandals. The automatic exchange on rulings, adopted in the wake of the “Luxleaks”, resulted in the creation of a central register which today brings together 18,000 “rulings”, these tax agreements signed between a company and a State, sometimes extremely advantageous. Unsurprisingly, these data show the preponderance of the Netherlands and Luxembourg in these practices, these two countries representing 75% of the rulings issued.

Tax cooperation has finally resulted in the exchange of information on the “country by country” data of multinationals. In two years, the French tax authorities have received more than 2,500 reports showing turnover, profits and taxes paid by large companies in each country of establishment. This report does not say how many adjustments have been notified on this basis, but it explains how the tax authorities have been able to modify their requests on companies, in particular concerning royalties and intragroup fees. Those data “Made it possible to add more than 160,000 foreign companies linked to French companies to the 64,000 companies identified so far”, explains the report.

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