Tax Audit in France: A Practical Guide to Stay in Control

/in /by

In 2024, tax audits in France reached new levels of effectiveness, with a record €16.7 billion in adjustments and penalties—€1 billion more than in 2023. For small and medium-sized business owners, the mere idea of an audit can still cause concern. Here’s how to better understand the process and approach it with confidence.

Step 1: Understand the Audit Type and Your Rights

There are three main types of tax audits in France:

  • Document-based audit (contrôle sur pièces): Done remotely by the tax authorities without your direct involvement, based solely on your declarations.

  • Accounting examination (examen de comptabilité): A remote audit based on your digital accounting records, particularly the Fichier des Écritures Comptables (FEC), which must be provided within 15 days.

  • On-site audit (vérification de comptabilité): A thorough in-person review of your accounts at your premises. This is the procedure most commonly referred to as a “tax audit” and will be the focus here.

The process begins with a formal notification sent by registered mail. This notice must include:

  • The exact fiscal years under review

  • Your right to be assisted by a representative

  • Details about the Charte du contribuable vérifié, outlining your rights and obligations

  • The names and positions of the auditor and their supervisor

  • The taxes under review and the scheduled date/time of the first visit

By law, at least two full working days must pass between receipt of the notice and the initial audit visit.

Step 2: Prepare Your Documentation

Gather all the required accounting and tax documents in advance:

  • The FEC file (in digital format) for each fiscal year under review

  • Invoices, bank statements, and contracts

  • General ledgers, journals, and trial balances

  • Tax returns and supporting documentation (VAT, corporate tax, etc.)

Typically, audits focus on the last three closed financial years, unless specific exceptions extend the statute of limitations to six or even ten years.

Organizing your documents by fiscal year and category—digitally or on paper—can prevent delays and reduce stress. Also, be proactive in identifying potential areas of concern, such as tax credits or international transactions, which may prompt further questions.

In 2023, over half of professional audits were triggered by data analysis and artificial intelligence tools. That means the auditor may already have a clear idea of what to investigate.

Step 3: Decide Who Will Assist You

Should you seek professional support during a tax audit?

  • An accountant is usually your first point of contact. They are familiar with your financial records and can explain your entries and tax choices. Their role is primarily technical and advisory.

  • A tax lawyer is best suited when legal interpretation or disputes arise. They are key in defending your interests if there’s a disagreement with the tax authorities.

If your advisor is not a lawyer, you must provide a written mandate authorizing them to act on your behalf. It’s recommended to prepare this mandate before the audit begins.

Step 4: Set the Right Tone at the First Meeting

Here’s a critical but often overlooked fact: you are presumed to act in good faith. The burden of proof lies with the administration. However, refusing to share requested documents can shift that burden back onto you.

The FEC file must be made available from the first meeting, so ensure it’s ready.

Throughout the audit, maintaining open communication is essential. This process is designed as a contradictory dialogue, meaning the exchange of views takes place directly and openly at your location.

While the auditor has broad powers, they are subject to legal limits. They may:

  • Review all accounting records and supporting documents

  • Make copies (originals must be returned with a receipt)

  • Collect samples for VAT analysis

  • Request information and exercise the right of communication

They cannot, however:

  • Conduct the audit outside legal hours (8 a.m. – 8 p.m. on business days)

  • Remove original documents without written consent and a receipt

  • Obstruct your normal business operations

Refusing an audit can lead to an automatic assessment of taxable income, loss of appeal rights, higher penalties, and even criminal consequences.

Step 5: Handle Requests and Respond Appropriately

The auditor may focus on certain risk areas, such as:

  • VAT (a key revenue source for the state)

  • Intra-group transactions

  • Provisions and extraordinary charges

  • Movements on shareholder current accounts

Response deadlines vary depending on the type of request:

  • Request for information: 30 days to respond; silence does not lead to automatic reassessment

  • Request for explanations or justifications: 2 months to reply, with a possible extension upon written request

Final Thoughts

A tax audit doesn’t have to be overwhelming. With the right preparation, organized records, and support from qualified professionals, you can turn a stressful procedure into a manageable formality. Know your rights, stay transparent, and focus on clear, respectful communication.