What must be declared
The starting point is simple. Any individual domiciled in France for tax purposes must declare each year, together with the income tax return, the bank accounts opened, held, used or closed abroad (Article 1649 A, paragraph 2 of the French General Tax Code (Code général des impôts, CGI)), as well as life insurance and capitalisation contracts taken out with institutions established outside France (Article 1649 AA). The obligation applies whether or not the account generates income, whether or not the contract has been funded, and it extends to accounts over which the taxpayer merely holds a power of attorney. It is fulfilled by filing form no. 3916 and its annex 3916 bis, one for each account or contract.
The same movement has reached the other forms of holding assets abroad. The trustee of a trust, or failing that its settlor or beneficiaries, must declare its existence and value (Article 1649 AB). Crypto-asset accounts opened with platforms established outside France are subject to a separate obligation (Article 1649 bis C), whose regime, more recent and still evolving, is addressed in a dedicated section below. A life insurance policy taken out in Luxembourg, Italy or Switzerland, often marketed as a “European” product, is no exception to the rule: it is a contract entered into with an institution established outside France and, as such, must be declared.
The omission is rarely the result of a strategy. An inherited account, a policy taken out before moving to France, a current account kept in the country of origin: the situations I encounter most often stem from inattention or from an approximate reading of the texts. The law, however, draws no such distinction, and that is precisely where analysis becomes useful.
Tax penalties: much more than a fine
The first consequence is the fine: €1,500 per account and per non-time-barred year (Article 1736, IV), and €1,500 per undeclared contract (Article 1766), increased to €10,000 where the account or contract is located in a State that has not concluded an administrative assistance agreement with France. Yet the fine is only the visible part of the mechanism.
The second consequence relates to time. The period during which the tax authorities may issue a reassessment (délai de reprise), normally three years, is extended to ten years for income tax where the obligations of Articles 1649 A, 1649 AA or 1649 AB have not been complied with (Article L. 169 of the French Tax Procedures Code (Livre des procédures fiscales, LPF), subject to a narrow exception for accounts whose aggregate balances did not exceed €50,000), and likewise to ten years for registration duties and the real estate wealth tax (Article L. 181-0 A). The income of the account or contract is then reassessed over ten years, with late-payment interest and a surcharge of 80 % specific to undeclared foreign assets (Article 1729-0 A), which cannot be lower than the amount of the fine.
The third consequence is a presumption. Sums transferred abroad or received from abroad through undeclared accounts or contracts are deemed, unless proven otherwise, to be taxable income (Articles 1649 A, paragraph 3 and 1649 AA). It is for the taxpayer to demonstrate, transaction by transaction, the nature of the flows.
The fourth consequence is the heaviest. The tax authorities may ask the holder of an undeclared account, contract or trust for any information or supporting evidence regarding the origin of the assets and the way in which they were acquired (Article L. 23 C of the LPF). The holder has sixty days to reply, extendable by thirty. Failing a sufficient reply, the assets are deemed to have been acquired free of charge and are assessed by the authorities on their own initiative to gift and inheritance tax (droits de mutation à titre gratuit) at the highest rate, namely 60 %, on the highest value the assets reached during the ten years preceding the request, less the value of those assets whose origin has been substantiated (Article 755 of the CGI). The Constitutional Council (Conseil constitutionnel) held the mechanism to be constitutional, noting that it is a rule determining the tax base and not a penalty (decision no. 2021-939 QPC of 15 October 2021): no intent therefore needs to be established. The Commercial Division of the Court of Cassation (Cour de cassation) has specified that the taxable event is the failure to reply to the authorities’ request, not the holding of the assets, so that their age has no bearing on the reassessment period; it declined to refer to the Court of Justice of the European Union the question of the mechanism’s compatibility with the free movement of capital (Cass. com., 17 September 2025, no. 23-10.403). An inheritance received twenty years ago and never declared therefore offers no protection: what matters is the ability to prove its origin on the day the authorities ask.
The special case of crypto-asset accounts
Since 1 January 2020, crypto-asset accounts (portefeuilles de crypto-actifs) opened, held, used or closed with companies, legal entities, institutions or organisations established abroad must be declared each year (Article 1649 bis C of the CGI), using form no. 3916-bis. The obligation covers accounts opened with foreign exchange or custody platforms, that is, situations in which a third party holds the keys on behalf of the user; wallets whose keys are held by the user alone fall outside this reporting obligation, but the gains they generate are no less taxable.
The fine is specific to this category: €750 per undeclared account or €125 per omission or inaccuracy, capped at €10,000 per return, increased to €1,500 and €250 where the value of the accounts exceeded €50,000 at any time during the year (Article 1736, X; BOI-CF-INF-20-10-50). Alignment with the ordinary rules then came in stages: the Finance Act for 2025 extended to ten years the income tax reassessment period in the event of a breach of Article 1649 bis C (Article L. 169 of the LPF), and Act no. 2026-534 of 25 June 2026 on the fight against social security and tax fraud extended to crypto-assets the ten-year period applicable to registration duties and the real estate wealth tax (Article L. 181-0 A), while giving non-fungible tokens a tax regime of their own and aligning the terminology with the European regulation on markets in crypto-assets (Regulation (EU) 2023/1114, known as MiCA). Capital gains on disposals fall, for the record, within the regime of Article 150 VH bis. By contrast, the request for supporting evidence under Article L. 23 C and the 60 % assessment that sanctions a failure to reply apply, as the texts currently stand, to accounts, life insurance contracts and trusts; whether they extend to crypto-asset accounts should be verified on a case-by-case basis.
The most significant change lies not in the penalties but in the information. Directive (EU) 2023/2226 of 17 October 2023, known as DAC 8, transposed by the Finance Act for 2025 (Article 1649 AC ter of the CGI), requires crypto-asset service providers to report their users’ transactions for operations carried out from 1 January 2026, with this information being exchanged between the tax administrations of the Union from 2027; the OECD Crypto-Asset Reporting Framework extends the mechanism beyond the Union. In other words, the year in which the voluntary disclosure unit would open is also the year in which tax administrations will receive platform data for the first time. The timing is no coincidence.
From a criminal standpoint, crypto-assets create no new offence but lend themselves, more than other assets, to the characterisations examined below: converting undeclared funds into digital assets, or routing them through anonymisation services or platforms that do not identify their customers, are precisely the kind of operations whose conditions “cannot have any justification other than” concealment within the meaning of the presumption of money laundering, which the legislature adapted in 2025 to transactions in crypto-assets.
Criminal exposure, first stage: tax fraud
A reporting failure is not, in itself, a criminal offence. It becomes one when it is accompanied by the wilful evasion of a tax: failing to declare the income of the account, failing to file an inheritance tax return, or concealing part of the taxable sums beyond one tenth of the tax base or €153 (Article 1741 of the CGI). Intent must be proven by the public prosecutor and the tax authorities (Article L. 227 of the LPF).
The penalties are a fine of €500,000 and five years’ imprisonment, increased to €3,000,000 and seven years where the offence was committed by means of accounts opened or contracts taken out with institutions established abroad, through an interposed foreign entity, or through a fictitious tax domicile (Article 1741, paragraph 2). The fine may be raised to twice the proceeds of the offence. Publication of the conviction is automatic unless the court gives reasons for deciding otherwise, since Act no. 2018-898 of 23 October 2018; deprivation of civic rights and confiscation may also be ordered, and the offender is jointly and severally liable for the evaded tax and the penalties (Article 1745). Prosecution is time-barred six years after the year in which the offence was committed (Article L. 230), each omitted annual return constituting a separate offence.
The 2018 reform changed the way such prosecutions arise. The tax authorities are required to refer to the public prosecutor the facts examined in the course of an audit which led, on reassessed tax exceeding €100,000, to a surcharge of 100 % or 80 %, including the surcharge of Article 1729-0 A specific to foreign assets, or of 40 % in the event of a repeat offence within six years (Article L. 228, I of the LPF). Below those thresholds, the authorities retain the option of filing a complaint after a favourable opinion of the Tax Offences Commission (commission des infractions fiscales). An undeclared foreign account of a certain size, discovered in the course of an audit, therefore takes the file to the prosecutor as a matter of course.
The combination of tax penalties and criminal sanctions is permitted, subject to conditions the court must verify: criminal prosecution is reserved for the most serious cases of concealment, assessed in the light of the amount of tax evaded, the nature of the conduct and the circumstances, and the aggregate amount of the penalties may not exceed the highest maximum applicable to any one of them (Constitutional Council, 24 June 2016, nos. 2016-545 QPC and 2016-546 QPC; Cass. crim., 11 September 2019, no. 18-81.040). The Court of Justice of the European Union has required proportionality to be assessed across all the sanctions, custodial sentence included (CJEU, 5 May 2022, case C-570/20), and the Criminal Division has drawn the consequences (Cass. crim., 22 March 2023, no. 19-81.929).
Criminal exposure, second stage: money laundering
This is where attention must be focused, because money laundering follows a logic with which taxpayers are unfamiliar. The French Criminal Code defines it as facilitating, by any means, the false justification of the origin of property or income derived from a crime or offence, or assisting in an operation to invest, conceal or convert the proceeds of such a crime or offence (Article 324-1). Three features make it formidable where foreign assets are concerned.
The first is autonomy. Money laundering is an offence distinct from tax fraud; a person who launders the proceeds of his own fraud is punishable, and the prosecution of money laundering is subject neither to a complaint by the tax authorities nor to the opinion of the Tax Offences Commission: the prosecutor may act alone, establishing the elements of the underlying fraud himself (Cass. crim., 20 February 2008, no. 07-82.977, Bull. crim. no. 43). The so-called “Bercy lock” (verrou de Bercy), the tax authorities’ historical control over the initiation of tax fraud prosecutions, already largely opened, simply does not exist on this side.
The second feature is the presumption. Since Act no. 2013-1117 of 6 December 2013, property or income is presumed to be the direct or indirect proceeds of a crime or offence where the material, legal or financial conditions of the investment, concealment or conversion operation cannot have any justification other than to conceal the origin or the beneficial owner of that property or income (Article 324-1-1). The presumption is rebuttable: it fails in the face of a plausible explanation of the origin of the funds, and the court must specifically identify the circumstances on which it rests (Cass. crim., 6 March 2019, no. 18-81.059). It does, however, relieve the prosecution of the need to identify the underlying offence precisely. For a foreign account whose origin cannot be documented, this is the provision that gives silence its criminal significance.
The third feature concerns the penalties and the passage of time. Money laundering is punishable by five years’ imprisonment and a fine of €375,000, and by ten years and €750,000 where it is committed habitually, using the facilities afforded by a professional activity, or by an organised group (Articles 324-1 and 324-2). The fine may be raised to half the value of the property or funds on which the laundering operations were carried out (Article 324-3). Where the underlying offence carries a heavier penalty, money laundering is punished with that penalty (Article 324-4): laundering the proceeds of tax fraud aggravated by the use of a foreign account is thus punishable by seven years. Confiscation of all or part of the offender’s assets may be ordered as an additional penalty, without any requirement that the confiscated property be connected with the offence (Article 324-7, 12°; Cass. crim., 30 March 2016, no. 15-81.550), subject to the court’s proportionality review (Cass. crim., 24 June 2020, no. 19-85.074). An important corrective has come from case law: in matters of laundering the proceeds of tax fraud, the laundered proceeds are the tax evaded, not the sums concealed, and a conviction that took the account balance as its basis would be quashed (Cass. crim., 11 September 2019, no. 18-81.040). Finally, Act no. 2025-532 of 13 June 2025 made money laundering a “deemed concealed” offence within the meaning of Article 9-1 of the French Code of Criminal Procedure: the limitation period now runs only from the discovery of the facts, subject to a twelve-year ceiling. From that standpoint, an old account is no longer a forgotten one.
What a voluntary disclosure changes
Since the closure of the Voluntary Disclosure Department (service de traitement des déclarations rectificatives) on 31 December 2017, regularisation has been governed by the ordinary rules: amended returns for the non-time-barred years, forms no. 3916 and 3916 bis, an inheritance tax and/or wealth tax return where applicable, a letter setting out the origin of the funds, supporting documents, and payment. The surcharges are not set aside by the spontaneous nature of the disclosure; their mitigation lies within the discretion of the tax authorities. The halving of late-payment interest provided for by Article 1727, V of the CGI is available only where the regularised breach does not preclude good faith, which limits its relevance for assets knowingly omitted. On the criminal side, by contrast, a spontaneous approach produces precise effects, which statute and case law have defined.
First, mandatory referral to the public prosecutor does not apply to taxpayers who have spontaneously filed an amended return (Article L. 228, I, last paragraph of the LPF). The Criminal Division reads this strictly: the exception applies only where the return has not been rejected by the tax authorities, and the criminal court does not review the validity of that rejection (Cass. crim., 23 May 2024, no. 23-80.025, concerning a disclosure declared inadmissible on account of an undisclosed business activity and missing years). Completeness and sincerity are therefore not incidental virtues: they condition the protective effect of the provision.
Second, the Criminal Code reduces by two thirds the maximum custodial sentence incurred by a launderer who, having alerted the administrative or judicial authorities, has made it possible to bring the offence to an end (Article 324-6-1, paragraph 2, as amended by the Act of 13 June 2025, which increased the reduction from one half to two thirds). A disclosure filed with the tax authorities alerts an administrative authority and puts an end to the concealment; the textual argument is sound, even though the courts have not yet, to my knowledge, applied it to this scenario.
Third, substantiating the origin of the funds, which lies at the heart of the tax file, also lies at the heart of the criminal file: it rebuts the presumption of Article 755 and removes the basis for the presumption of Article 324-1-1. Where the origin is lawful, an inheritance for instance, the only proceeds of an offence that could have been laundered are those of the tax fraud, namely the tax evaded and the income omitted, which reduces what is at stake to a fraction of the balance. The documents to be gathered follow from this logic: statements since the account was opened, deeds of inheritance or gift, contracts, and above all the onboarding file compiled by the foreign institution under its own due diligence obligations, which it generally keeps for ten years and which the client is entitled to request.
What a voluntary disclosure does not do deserves to be stated just as plainly. It is neither a justification nor a ground for extinguishing the public prosecution; the tax authorities retain the option of filing a complaint after an opinion of the Tax Offences Commission, and of informing the prosecutor of facts liable to constitute money laundering (Article 40 of the Code of Criminal Procedure); the institution receiving repatriated funds may file a suspicious transaction report with TRACFIN, the French financial intelligence unit. And any movement of the funds before filing, whether a transfer, a repatriation or a reinvestment, would be analysed as a fresh conversion or concealment operation. A disclosure is prepared before it is filed, and it is filed before anything moves.
The 2027 voluntary disclosure unit, cum grano salis
The precedent of 2013 to 2017 rested on a ministerial circular, a published scale of reduced surcharges, and the absence, in practice, of tax fraud prosecutions on the sole ground of holding undeclared assets. The mechanism announced for 2027 should offer a comparable framework, but its conditions will be known only once the text is published, and the text must be passed by Parliament. Three observations can already be made.
The first is that the favourable conditions will, in all likelihood, concern tax penalties. They will alter neither the constituent elements of money laundering, nor its presumption, nor its limitation period, now aligned with that of concealed offences; those matters fall within the Criminal Code and the remit of the prosecutor, not within a finance act. A taxpayer who cannot document the origin of his assets will not find in the disclosure unit the answer to his real problem.
The second concerns timing. The ten-year reassessment period is counted by calendar year: a disclosure filed before 31 December 2026 covers the income of 2016, which falls out of scope in 2027. Conversely, the automatic exchange of information, in force with all the Member States of the European Union and most financial centres since 2017 and 2018, means that the tax authorities already hold, for many accounts, most of the data; an audit launched in the meantime would forfeit the benefit of a spontaneous disclosure. Italy, which introduced its own voluntary disclosure mechanisms from Act no. 186 of 15 December 2014 onwards, drew the same lesson: windows close faster than files are assembled.
The third is that preparing the file does not depend on the disclosure unit. Reconstructing the history, gathering the evidence of origin, checking the movements, measuring the exposure year by year: all this takes weeks and can be started today, to be filed tomorrow under the most favourable regime, or right away if the risk of discovery so requires. Waiting for the text is legitimate; waiting to begin is not.
Conclusion
Failing to comply with the reporting obligations attached to accounts and contracts held abroad exposes the taxpayer to an accumulation of tax consequences that is frequently underestimated, and to a criminal risk that is most often ignored: that of money laundering, an autonomous offence, presumed where the origin of the funds cannot be explained, and now treated as a concealed offence. A voluntary disclosure that is spontaneous, complete, documented and filed before any audit genuinely changes the taxpayer’s position, in law as in practice. The announcement of a voluntary disclosure unit for 2027 is good news for those who were waiting for it; it is not a reason to postpone reviewing one’s own situation, which remains, in every case, singular.
S.ASSOGNA
The firm is pleased to contribute to legal information and to share current developments. These writings in no way replace the legal advice of a lawyer, especially in tax law, where the specific features of personal, professional and asset-related situations may lead to different conclusions. Readers are invited to contact the firm with any comments or thoughts.
