January 27, 2023

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Taxes: how the offshore assembly scandals allowed the tax authorities to recover millions


Posted Jan 23, 2023, 12:50 PM

While the National Financial Prosecutor’s Office has just issued an ultimatum to the French involved in the “Dubai Papers”, other scandals continue to occupy the tax authorities and the courts. And the exploitation of information born from leaks of confidential documents is proving fruitful. Two resounding cases – the “Panama Papers” and the “Paradise Papers” – have thus made it possible to bring nearly 200 million euros into the coffers of the State to date, according to the General Directorate of Public Finances (DGFIP). .

The “Panama Papers” file alone brought in 176 million euros to France. This case was revealed in 2016 by the International Consortium of Investigative Journalists, after a whistleblower transmitted files from the Panamanian firm Mossack Fonseca, which specializes in mounting front companies facilitating the concealment of assets. More than 600 files have been examined by Bercy. Of these, 198 gave rise to regularizations or adjustments following controls.

Tax regularizations and adjustments

Another case stemming from a massive leak of data from a law firm, in Bermuda this time, the “Paradise Papers” have brought in 11.2 million euros since the publication of the press articles, between the end of 2017 and beginning of 2018. The administration specifies that it examined 240 files, carried out just under 60 tax audits, to arrive at 35 regularizations and adjustments.

Regarding the “Pandora Papers” (2021) or the “Dubai Uncovered” file (2022), the DGFIP “does not yet have sufficient hindsight to quantify the issues of the procedures initiated”, but complaints to the tax police have been filed. .

These surveys “constitute an entry point for directing research”, explains Bercy. “Without them, the probability would be much lower for the DGFiP to learn of the existence of undeclared assets held via interposed offshore structures created in States and territories with which the automatic exchange of information does not exist”. The fact remains that once this first obstacle has been removed, requests for information addressed to certain countries do not always succeed.

Exchange of information

This is particularly the case in the “Panama Papers” affair, for which the administration specifies that the figures are not definitive, “the majority of files remaining blocked by the absence of a complete response to requests for administrative assistance international”. ​Without relevant information on the amount of assets held, it is difficult to establish a tax.

However, international cooperation has improved in recent years. With the entry into force of the multilateral OECD convention in 2016, France exchanges information with 160 countries. According to a report appended to the budget for 2023, Bercy sent 4,231 requests abroad for direct taxes in 2021. The response time remains long, even if it has gone from 310 to 274 days.

Banking secret

In addition to border States and those with which economic exchanges are significant (United Kingdom, Germany), France sends a large number of requests to States in which financial centers are located (Hong-Kong, Cyprus) and those favoring the creation offshore companies (British Virgin Islands, Panama).

“The persistence of significant flows allows France to maintain a high level of effectiveness of international cooperation and to appreciate in return the quality of the information obtained from these countries”, indicates Bercy.

In addition, the automatic exchange of information provides an increasingly substantial volume of data to the tax authorities. The administration received information on no less than 5.8 million accounts held by French people abroad in 2021. This is almost six times what it obtained in 2017, the year when banking secrecy wavered.