What happens during a tax audit in France? Part 3: tax litigation in France as seen by a French tax lawyer.

If, after analysis by a French tax lawyer, it appears that the tax reminders and/or penalties levied may be contested, the taxpayer has a right of appeal.

Litigation in tax matters may consist of providing supporting documents or explanations that were not provided to the tax authorities during the tax audit.

It may also be argued that the audit department's interpretation of tax law is questionable and does not meet the criteria set by legal standards that apply to everyone, including the tax authorities, and that are derived from the law, an international tax treaty, administrative doctrine or case law.

Lastly, certain procedural rules, which guarantee the fundamental rights of taxpayers, may not have been respected: statute of limitation, unavailable means of appeal, oral and adversarial debate non respected when required, and so on.

It is therefore always possible to defend oneself if there are serious arguments to contest, which is often the case and requires prior analysis by a tax law professional.

The contentious phase is initiated by a written claim, which must be filed within a certain period, generally no later than 31 December of the second year following the year in which the tax was levied. In certain situations, this deadline is shorter or, on the contrary, is extended.

The contentious claim, which consists of contesting the tax issued after the audit by means of relevant legal arguments and/or the production of supporting documents, is sent to the tax authorities so that the case can be re-examined.

A very important point is that the complaint may be accompanied by a request for deferment of payment, which obliges the administration to suspend collection and prosecution measures.

In this case, you need to liaise between the department responsible for investigating the claim and the department responsible for collecting the tax. This should be done as quickly as possible to avoid wage garnishments, bank account seizures or other measures to force collection of the tax debt. It should never be forgotten that a tax assessment is legally due immediately.

It goes without saying that a French tax lawyer is essential, as this requires experience, skill and an understanding of both tax law and the way the tax system works as a whole.

After examining the claim and, if necessary, requesting additional supporting documents, the tax authorities will issue a decision, which may be to accept the claim in full, thereby ending the tax dispute, or to accept in part the arguments put forward by the taxpayer and his tax lawyer, or to reject the claim altogether.

In some cases, the administration does not respond and the case remains pending.

If the administration's decision is unsatisfactory and seems likely to be challenged in court with some chance of success, or if there is no decision after six months' silence, the dispute may be brought before the competent court, either the Administrative Court (for income tax, corporation tax and VAT) or the Court of First Instance (property wealth tax, inheritance tax, gift tax and other registration duties).

Appeals to the courts must be lodged within a strict and fairly short time limit of two months from receipt of the administration's decision. This period is extended for taxpayers who are not domiciled in France.

The assistance of an experienced tax lawyer is essential to ensure that your interests are defended, that the strategy is put in place and that the chances of success are properly assessed.

Founded in 2007, CM-Tax law firm and its team of English-speaking tax lawyers are based in Lyon and Marseille and operate throughout France. We offer our French and international clients our experience and expertise in tax law to support, advise and defend your interests.