Who conducts audits and on what legal basis?
The French Tax Authority (DGFiP) has jurisdiction to audit any individual or legal entity with tax obligations in France, whether resident or not. For non-residents, it is generally the Foreign Enterprises Tax Service (SIEE), attached to the Directorate for Residents Abroad and General Services (DRESG), that handles such cases.
The legal basis for audits rests on the Tax Procedures Code (LPF), in particular Articles L. 10 to L. 100. Any entity registered for French VAT, any non-resident property owner, or any company generating taxable profits in France may be audited, regardless of their country of establishment.
Types of tax audits
Several types of audits may affect a non-resident or a foreign company operating in France. Each follows a specific procedure with its own set of guarantees.
- Desk-based audit (contrôle sur pièces): conducted from DGFiP offices, it involves cross-referencing declarations with available data (banking information, third-party declarations, customs data). This is the most common form and often invisible to the taxpayer until an information request is received.
- On-site accounting audit (vérification de comptabilité): a tax inspector visits the company's premises (or those of its tax representative) to examine accounting records. This mainly applies to companies with commercial activity in France.
- Remote accounting review (examen de comptabilité à distance – ECD): introduced in 2014, this allows the DGFiP to analyse digitised accounting files without an on-site visit. Widely used for foreign companies whose archives are difficult to access physically.
- VAT audit: triggered when discrepancies appear between CA3 returns, intra-EU transactions, and data from business partners.
- Tax flagrancy procedure (procédure de flagrance fiscale): reserved for cases of clear fraud. It allows the administration to seize assets and issue an immediate report.
| Type of audit | Who is targeted? | Average duration |
|---|---|---|
| Desk-based audit | All taxpayers | 3 to 6 months |
| On-site accounting audit | Companies (BIC/BNC/IS) | 6 to 12 months |
| Remote accounting review | Companies with FEC files | 3 to 6 months |
| Targeted VAT audit | VAT-registered entities | 2 to 4 months |
How does the procedure work?
A tax audit follows a formalised procedure with regulatory milestones that taxpayers must understand in order to exercise their rights.
1. The audit notice: any on-site audit must be preceded by a notice sent at least two working days before the first visit. This notice specifies the subject of the audit, the years under review, and the taxpayer's right to be assisted by an adviser.
2. The audit and exchanges: the inspector examines documents, asks questions, and may request written explanations. For non-residents, the tax representative is typically the main point of contact.
3. The proposed adjustment (formerly "redressement"): if discrepancies are found, the administration issues a reasoned proposed adjustment. The taxpayer has 30 days (extendable to 60 days on request) to respond.
4. The response and appeals: in the event of disagreement, several avenues are available: hierarchical appeal, the tax disputes commission, and then litigation before the administrative courts.
Your rights before the tax authority
French tax law grants significant guarantees to audited taxpayers, including non-residents. These rights must be exercised within the applicable deadlines.
- Right to adviser assistance: a tax lawyer, chartered accountant, or tax representative may accompany you at every stage.
- Right to the audited taxpayer's charter: this document must be provided at the start of any on-site audit and summarises your rights and the administration's obligations.
- Right to meet a senior inspector: if you have an ongoing disagreement with the inspector, you may request a meeting with their superior.
- Right to a discretionary appeal (recours gracieux): available after the tax has been assessed, to seek partial remission of penalties and late interest.
To avoid these risks and have a responsive point of contact with the DGFiP, appoint an accredited tax representative. Our directory lets you compare approved professionals by speciality and situation.