In more detail
As a reminder, Article 1649 A, paragraph 2 of the French Tax Code (FTC) provides that individuals (as well as non-profit associations and non-commercial companies) must declare, with their income tax return, "the references of accounts opened, held, used or closed abroad".
Article 344 A of Annex III to the FTC also provides for a presumption according to which "an account is deemed to have been used by one of the persons referred to in the first paragraph if that person has made at least one credit or debit transaction during the period covered by the declaration, whether he is the account holder or has acted by proxy, either for himself or for the benefit of a resident person".
In a recent decision, the French Administrative Supreme Court ruled that there is an obligation to declare "any bank account opened, used or closed abroad by an individual, a non-profit association or a non-commercial company being domiciled or established in France, whomever the holder of this account may be, including notably if this holder is a commercial company" (CE, 8 March 2023, No 463267). As this decision was issued in a specific context of fraud, many corporate officers wondered whether they should report all the foreign accounts of companies in which they are corporate officers.
Following this decision, a question was submitted to the French Minister of the Economy to clarify "under what conditions the corporate officers of commercial companies are personally required to declare the foreign bank accounts of these companies which they use exclusively for business purposes."
The ministerial response dated 31 August 2023 reminds that, since Law No. 2018-898 of 23 October 2018 on the fight against fraud, Article 344 A of Annex III extends the reporting obligation to persons with the status of joint holders, economic beneficiaries, and beneficial owners. In this respect, the response specifies that a corporate officer would be required to declare his company's foreign bank account if he can be considered as the economic beneficiary or beneficial owner of the account "whose ownership is concealed, for example, by means of a nominee or a shell structure." The response adds that the same obligation applies in cases where the shareholder or corporate officer of a foreign company, even though this entity performs a real business activity, carries out transactions on the company's bank account for his own benefit.
However, the ministerial response indicates that these new provisions have not questioned the conclusions of the ministerial response Poisson dated 29 December 2015 (AN p. 10789 No 82934), according to which the corporate officers of a company holding foreign bank accounts are not required to declare them unless they are joint holders or benefit from a power of attorney over these accounts. The ministerial response Mizzon concludes by stating that "the fact that a person holds a shareholding in a foreign company or is its corporate officer does not, in itself, make him fall within the scope of the reporting obligation provided by the second paragraph of Article 1649 A of the FTC".
Although this ministerial response dated 31 August 2023 is favorable to corporate officers of operating companies holding foreign bank accounts, they must be vigilant and it is recommended to proceed to a case-by-case analysis.
