France To Axe Special Tax Unit

by Ulrika Lomas, Tax-News.com, Brussels

14 September 2010

The French budget ministry has announced that its special tax unit, responsible for examining the queries and appeals of individual taxpayers in France, is to be permanently abolished. The announcement follows in the wake of the Bettencourt controversy.

The ministry explained that any appeals addressed directly the country’s budget minister would in future be submitted to “le comité du contentieux fiscal”, a tax dispute commission comprised of various magistrates (advisors to the Court of Auditors, to the Court of Appeal or to the Council of State). Up until now, only files involving significant amounts of money or the budget minister himself were submitted to this commission, which was established by the law of December 29, 1977 (la loi du 29 décembre 1977).

The ministry’s announcement follows a recent statement made by the French Budget Minister François Baroin, confirming that “it is preferable” to put an end to the tax unit at the very heart of the minister’s office. Baroin explained that the role of this structure, which has always existed, has been misunderstood.

The special tax unit within the budget minister’s office is currently tasked with responding to taxpayers seeking clarification on fiscal matters. Correspondence received by the team is for the most part from parliamentarians writing on behalf of taxpayers who are aggrieved, for example as a result of a tax adjustment. The unit also deals with letters from “personalities”, notably big employers.

These queries are subsequently transferred by the unit to the country’s administrative services (such as the general directorate of public finances) which, depending on the particular case, either respond directly or propose a draft response to be signed by the budget minister.

According to the general inspectorate of finances, however, it is the very existence of the ministry unit that breeds suspicions. The general inspectorate of finances was called in to examine the role of the former Budget Minister Eric Woerth in the Liliane Bettencourt case. Woerth is accused of having shielded the L’Oréal heiress Liliane Bettencourt from tax investigations in return for illegal party donations during the 2007 election campaign. Liliane Bettencourt allegedly concealed EUR78m from the French tax authorities in Switzerland.

Some means of recourse must continue to exist, Baroin emphasized, explaining that two circulars would shortly be published: one pertaining to fiscal controls, the other clarifying the procedure for dealing with appeals directly addressed to the minister.

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