On November 28, the Senate approved crucial amendments to tax regulations, including stricter measures against tax evasion. The investigation period for tax residency claims has been extended to ten years. New regulations also impose high inheritance tax rates on digital assets and streamline VAT processes for energy renovations by simplifying documentation requirements. This aims to enhance compliance and reduce administrative burdens for taxpayers and small businesses alike.
Senate Adopts Key Amendments to Tax Regulations
On Thursday, November 28, the Senate approved several significant amendments during the first reading, including changes related to the removal of CERFA certificates for reduced VAT rates and new requirements for declaring cryptocurrency portfolios. Here’s what these changes mean for you.
Enhanced Measures Against Tax Fraud
The tax authorities are poised to tighten their grip on tax evasion. An amendment passed by the Senate as part of the 2025 budget review allows for a more stringent approach towards individuals who falsely claim to be domiciled abroad to evade their tax obligations in France. Senator Nathalie Goulet highlights that such individuals often misrepresent their tax residency, complicating the tax administration’s efforts to verify their actual domicile.
Currently, tax authorities have a three-year window to investigate and enforce tax assessments. However, due to the intricate nature of challenging fraudulent tax domiciles, the Senate has extended this period to **ten years**. This extension is intended to give tax services adequate time to accurately determine a taxpayer’s true residence and the corresponding taxes owed on all relevant income and assets. The new recovery period will be applicable to income tax, wealth tax, inheritance tax, and any recovery periods that expire from January 1, 2025.
Regulating Digital Assets
In another noteworthy development, an amendment proposed by Jean-François Husson on behalf of the Finance Committee clarifies that assets held in foreign accounts or investment contracts are subject to “inheritance tax at the highest rate.” This amendment now extends to include “**digital assets listed in a digital asset portfolio**.” The rationale behind this change is that digital assets can potentially facilitate tax fraud or conceal unlawful activities.
The amendment aims to align the treatment of undeclared digital assets held abroad with that of foreign bank accounts and investment contracts, ensuring a consistent legal framework. It proposes to implement **official taxation procedures in cases of unreported capital gains from the sale of digital assets**, thereby reinforcing compliance and accountability.
Streamlined VAT Processes for Energy Renovations
In a positive turn of events, the Senate has also streamlined the process for obtaining reduced VAT rates of **5.5% for energy renovation work** and **10% for residential renovations** completed over two years ago. New amendments have simplified the requirements for taxpayers, eliminating the need for multiple CERFA certificates that previously complicated the process.
Now, a simple mention on the signed quotes or invoices will suffice for requesting reduced VAT. This change aims to alleviate the administrative burden on small businesses and simplify the process for clients. The provision allows clients to provide their certificates in compliance with the law while making it easier for artisans to manage their administrative tasks.