The National Assembly Proposes Picking Bercy's Lock

Author:Mr Philippe Lorentz and Jean-Baptiste Boué-Diacquenod
Profession:August & Debouzy

Set up after the parliamentary debates on the Act for Confidence in Political Life, the information commission on prosecution of tax offences provided its report 1 last May 23.After several hearings of the tax authorities, the judiciary and lawyers from civil society, the members of parliament recommend eliminating the "Bercy lock" by "giving the keys" to the public prosecutor, and they propose several changes in the criminal justice system for tax matters.Focus on this report's proposals.

Instituted in 1920 when the general misdemeanor of tax fraud was created 2, the "Bercy lock" procedure was then part of the tax authorities' monopoly over criminal prosecution.However, to limit the risk of abusive complaints by the tax authorities, the admissibility of these complaints were subsequently subject to a favorable opinion by the commission on tax offences ("CIF"), created in 1977 3.The initial monopoly, therefore, had a second "lock" 4.

Since then, the tax authorities' complaint occurs after three steps:

An administrative selection of cases after a completed tax audit or in case of established presumptions of fraud 5.The criteria for transmission to the CIF are defined in a circular memorandum of May 22, 2014 6, which gives the tax authorities significant assessment leeway.The tax authorities transmit to the CIF every year around 1,000 cases after completed tax audits, which represents (i) 2% of tax audit cases, (ii) 7% of cases subject to tax penalties, and (iii) 20% of cases for which taxes due and notified exceed €100,000. The CIF's opinion is not reasoned and cannot be appealed.This opinion is binding on the tax authorities.In 2017, 95% of the CIF's opinions were favorable. In case of a favorable opinion by the CIF, the tax authorities file a complaint with the competent public prosecutor, who has discretion as to whether it brings charges. This procedure occurs in most cases after a tax audit and if the tax authorities wish in addition to have criminal sanctions applied.In addition, the scope of the "Bercy lock" is limited to only the tax offences defined by the French Tax Code (CGI) 7 and not to the tax offences under ordinary law, within the scope of the criminal code 8, even if they have a tax purpose.

Therefore, the "lock" procedure's purpose is not to allow the taxpayer, through governmental action, to avoid paying the income taxes and penalties due.On the contrary, the report points out that, "the statistics of tax audits have...

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