It is important to check with any employees and officers tax resident in France that they declare all remuneration on their income tax return. This must include any sums paid into a foreign bank account, such as bonuses, along with the foreign bank account itself.
Taxpayers whose tax residence is in France must declare the wages (salaries, bonuses, benefits in kind, etc.) that were paid to them during the previous year, regardless of whether these amounts were paid in or outside France.
Under Article 1649 A paragraphs 2 and 3 of the French Tax Code, they must also report any accounts opened, used or closed with a bank located abroad (or any entity of private or public law that usually receives deposit securities, bonds or cash).
An account is deemed to have been ‘used’ if it has made at least one credit or debit transaction during the period covered by the declaration.
The reporting can be done using the form ‘Declaration by a resident of an account opened outside France’ - form no. 3916 (no. CERFA 11916). This must be attached to declaration form no. 2042 (no. CERFA 10330), and the box marked "uu" (bank accounts abroad) should be checked. The forms must then be filed before the relevant deadline.
In addition, individuals must report any foreign sources of income on declaration form no. 2047 (no. CERFA 11226), attached to form no. 2042.
Every employer must inform the French tax authorities annually of the sums paid to its employees. The French tax authorities deal with the remuneration declared by the employees on their own tax returns. In addition, the French tax authorities have the power to carry out additional investigations: visit and seizure procedures, international administrative assistance enabling them to identify the foreign account into which the sums involved were collected.
If a taxpayer has not declared all their remuneration, the French tax authorities reassess the amount of wages declared by the taxpayer. Penalties of 40% can be added to the reassessment if the error is deemed to be deliberate.
If the foreign bank account has not been declared by the taxpayer, the taxpayer will incur a fine of €1,500 (€ 10,000 in some cases). This is increased to 5% of the credit balance for accounts with credit balances of over €50,000
Client Alert 2015-142