May 18, 2021
In application of article 1649 AA of the French Tax Code (“FTC”), taxpayers domiciled in France must declare, at the same time as their income tax return, the references and information concerning capital redemption bonds or investments of the same kind, including life insurance policies taken out with companies based outside France.
On 18 February 2021, the Government published a decree modifying the application conditions of this article.
Amongst other things, form no. 3916 was also changed and is no longer limited to bank accounts held abroad. It henceforth provides for a section relating to life insurance and capital redemption bonds held abroad.
How to proceed with the reporting?
In order to proceed with the reporting provided for by article 1649 AA of the FTC, taxpayers must append to their return no. 2042, a return no. 3916-3916 bis[1] indicating the capital redemption bonds or investments of the same kind including life insurance policies taken out, modified or closed in 2020 outside France. They must also tick box 8TT of their tax return no. 2042.
What information is to be included in the tax return?
Taxpayers must append a special return to tax return no. 2042 mentioning, for each policy[2]:
- The identification of the policyholder: surname, first name, address, date and place of birth;
- The address of the registered office of the insurance company or similar body and, where applicable, of the branch providing the cover;
- The name of the policy or investment, its references and the nature of the risks covered;
- The duration for which the risk is covered and the term of this cover;
- The effective date of amendments made during the previous year;
- The effective date and the amount of each total or partial surrenders carried out during the previous year;
- The total amount of the premium payment operations carried out during the previous year;
- As the case may be, the surrender value and/or the amount of capital guaranteed as at 1 January of the tax year;
What are the penalties if no return is filed?
Failure to file this tax return is sanctioned by a fine of EUR 1,500 for each undeclared policy[3], and may in certain cases be subject to more severe sanctions up to 80% of the duties due in the event of rectifications of the sums appearing or having appeared on the policies which should have been declared.
Payments made abroad or originating from abroad by the intermediary of undeclared policies under the conditions provided for constitute taxable income, unless proved otherwise.
The sanctions are applicable in the absence of declaration or when one of the declarative items required has not been provided.
The fine is applicable to every non time-barred year for which a tax return should be filed.
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[1] A 3916-3916 bis return must be completed for each of the accounts, policies and investments concerned.
[2] Article 344 c appendix III GTC.
[3] Or EUR 10,000 if the declarative obligation involves a country or territory which has not entered into an administrative assistance agreement with France in order to combat tax fraud and evasion providing for access to banking details. (Article 1766 of the GTC).
