French tax authorities given power to go undercover on social media
French tax authorities have been given new powers to crackdown on fraud, including the ability to create fake accounts on social media to catch suspected wrongdoers.
As part of France's 2024 budget, fiscal authorities will receive more powers, including the ability to use fake social media accounts including on Facebook, Twitter, Instagram and TikTok, to catch tax evaders.
Among the things that tax agents will be targeting are people working and not declaring their income and those falsely claiming to have a tax residency outside France.
EXPLAINED: The rules on tax residency in France
The ability to carry out investigations using pseudonyms will only be available to tax agents who hold at least the rank of 'public finance controller' (contrôleur des finances publiques).
This extends the powers that tax agents already have to use technology to catch out people who are lying about their financial status.
Up until 2024, tax agents could only verify information on 'obviously accessible' platforms.
For instance, this might have involved scrolling adverts on Leboncoin or Airbnb to catch out people who were renting out properties and not declaring the income.
Tax authorities have for several years been using Google Maps aerial views for detecting undeclared swimming pools, home extensions and sheds.
READ MORE: French tax authorities find 120,000 undeclared swimming pools
They can now create fake social accounts to collect "information that is publicly accessible on online platforms," according to Capital FR.
In addition to building false profiles, agents will also be able to "participate in electronic exchanges" with people they suspect of tax fraud - for example asking if people would be available to do some work or if they have a property to rent out.
What are the rules around these investigations?
There will be constraints around when an agent can be authorised to conduct an investigation of this manner. According to the finance law, agents have the right to collect and such data only to detect 'serious' breaches.
Valid reasons for these types of investigations will include:
- a failure or delay in filing a declaration of a concealed income-earning activity or work
- a failure or delay in filing a declaration regarding an unauthorised construction or development project (eg. installing a swimming pool without authorisation)
- disposal of assets or sums of money relating to an illegal activity
- a failure to declare life insurance or similar accounts/ contracts held abroad (including trusts), that would normally lead to an increase in tax
READ MORE: What Americans in France need to know about trusts
Why authorise this?
According to French senators Claude Raynal and Jean-François Husson, the authors of a report on the fight against tax fraud presented in October 2022, the goal of this decree is to help tax authorities discover new methods of tax evasion.
These include "online platforms, as they are important vectors for hidden work, and therefore [evasion of] VAT or income tax," La Dépèche reported.
French attorney Emmanuel Laporte told Le Figaro that tax authorities will focus efforts on three 'sensitive' areas;
- the identification of undeclared profit-making activities likely to have led to omissions in terms of income tax, corporation tax or VAT
- the characterisation of a false tax domicile abroad likely to establish deliberate inadequacies in tax declarations in France with respect to income tax and social security deductions, the IFI (wealth tax) or gratuitous transfer duties
- the discovery of obvious discrepancies between a taxpayer's apparent personal situation (lifestyle, assets) and his or her tax returns, suggesting various intentional tax deficiencies.
When will tax agents be able to do this?
Tax agents will have to wait until the decree has been published in France's Journal Officiel prior to creating any fake social media accounts. According to TF1, at the latest this would take place on December 31st, 2024, although it is likely to be earlier.
What will tax agents be able to do with your data?
Currently, French law states that tax authorities can only keep data and information that is strictly necessary for investigations for a maximum of one year. However, the new rules will extend the cap to two years, with a likely transition period before the change takes hold, according to Capital FR.
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As part of France's 2024 budget, fiscal authorities will receive more powers, including the ability to use fake social media accounts including on Facebook, Twitter, Instagram and TikTok, to catch tax evaders.
Among the things that tax agents will be targeting are people working and not declaring their income and those falsely claiming to have a tax residency outside France.
EXPLAINED: The rules on tax residency in France
The ability to carry out investigations using pseudonyms will only be available to tax agents who hold at least the rank of 'public finance controller' (contrôleur des finances publiques).
This extends the powers that tax agents already have to use technology to catch out people who are lying about their financial status.
Up until 2024, tax agents could only verify information on 'obviously accessible' platforms.
For instance, this might have involved scrolling adverts on Leboncoin or Airbnb to catch out people who were renting out properties and not declaring the income.
Tax authorities have for several years been using Google Maps aerial views for detecting undeclared swimming pools, home extensions and sheds.
READ MORE: French tax authorities find 120,000 undeclared swimming pools
They can now create fake social accounts to collect "information that is publicly accessible on online platforms," according to Capital FR.
In addition to building false profiles, agents will also be able to "participate in electronic exchanges" with people they suspect of tax fraud - for example asking if people would be available to do some work or if they have a property to rent out.
What are the rules around these investigations?
There will be constraints around when an agent can be authorised to conduct an investigation of this manner. According to the finance law, agents have the right to collect and such data only to detect 'serious' breaches.
Valid reasons for these types of investigations will include:
- a failure or delay in filing a declaration of a concealed income-earning activity or work
- a failure or delay in filing a declaration regarding an unauthorised construction or development project (eg. installing a swimming pool without authorisation)
- disposal of assets or sums of money relating to an illegal activity
- a failure to declare life insurance or similar accounts/ contracts held abroad (including trusts), that would normally lead to an increase in tax
READ MORE: What Americans in France need to know about trusts
Why authorise this?
According to French senators Claude Raynal and Jean-François Husson, the authors of a report on the fight against tax fraud presented in October 2022, the goal of this decree is to help tax authorities discover new methods of tax evasion.
These include "online platforms, as they are important vectors for hidden work, and therefore [evasion of] VAT or income tax," La Dépèche reported.
French attorney Emmanuel Laporte told Le Figaro that tax authorities will focus efforts on three 'sensitive' areas;
- the identification of undeclared profit-making activities likely to have led to omissions in terms of income tax, corporation tax or VAT
- the characterisation of a false tax domicile abroad likely to establish deliberate inadequacies in tax declarations in France with respect to income tax and social security deductions, the IFI (wealth tax) or gratuitous transfer duties
- the discovery of obvious discrepancies between a taxpayer's apparent personal situation (lifestyle, assets) and his or her tax returns, suggesting various intentional tax deficiencies.
When will tax agents be able to do this?
Tax agents will have to wait until the decree has been published in France's Journal Officiel prior to creating any fake social media accounts. According to TF1, at the latest this would take place on December 31st, 2024, although it is likely to be earlier.
What will tax agents be able to do with your data?
Currently, French law states that tax authorities can only keep data and information that is strictly necessary for investigations for a maximum of one year. However, the new rules will extend the cap to two years, with a likely transition period before the change takes hold, according to Capital FR.
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