Tax fraud: the Constitutional Council validates the opening of the “lock of Bercy”

The Wise consider that the criteria for the automatic transmission of tax fraud cases to the Public Prosecutor’s Office, created in the fraud law of 2018, do not create a breach of equality before tax. This decision follows an appeal by Afep reflecting the concerns of the business community about the penalization of tax adjustments.

The Constitutional Council considers that the criteria for the automatic transmission of tax fraud cases to the Public Prosecutor's Office do not create a breach of equality before tax.

The new “Bercy lock”, relaxed in the fraud law of October 2018, received a blank check from the Constitutional Council. In a decision rendered this Friday, the Wise Persons considered that the criteria for the automatic transmission of tax fraud cases to the Public Prosecutor’s Office do not create a breach of equality before tax. “By retaining the aforementioned mandatory reporting criteria, the legislator has not established unjustified discrimination between taxpayers”, said the Constitutional Council in a press release.

This decision follows an appeal by the French Association of Private Enterprises (Afep), representing the 100 largest French groups, before the Council of State, which in early July transmitted a priority question of constitutionality (QPC). The Association wanted the Constitutional Council to rule on the relaxation of the “lock of Bercy”, insofar as the Wise Men had not been seized by the parliamentarians of the opposition on the fraud law of 2018. An approach reflecting the concern of the business community in the face of a growing “penalization” of tax adjustments.

Automatic transmission

Until 2018, the “Bercy lock” granted the administration a monopoly on the decision whether or not to prosecute a taxpayer for tax evasion, after consulting the Commission des infractions fiscal (CIF). This procedure aimed to avoid a double sanction – administrative and criminal – contrary to the principle of “non bis in idem”, according to which the same offense cannot be convicted twice.

Criticized for its opacity, this mechanism was reformed in the law on fraud which creates automatic transmission criteria for adjustments greater than 100,000 euros, with heavy penalties.

Twice as many files sent

The employers consider this threshold of 100,000 euros low for a large company subject to corporate tax. In its decision, the Constitutional Council considered that taxpayers are not deprived of “any guarantee”. In reality, the opening of a complaint will not be automatic, it will be up to the Public Prosecutor’s Office to judge the advisability of it.

This legislative development has already had consequences on the flow of cases sent to justice. In an interview with “Echos”, the Minister of Action and Public Accounts, Gerald Darmanin, announced that magistrates received almost twice as many tax files in the first half of the year compared to last year. More specifically, the administration transmitted 787 files, an increase of 85%.

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