French Proposal to Criminalize Fraud "Incitement" Fails to Define Fraud
YouTube scam inspired the proposal, attorney says
A French government proposal to make it a crime to help others commit tax fraud lacks a clear definition of “fraud,” without which it’s unlikely to pass constitutional muster, a practitioner told LegalAvocado.
Under current French law, prosecutors seeking to prove incitement to fraud must first show someone committed criminal tax fraud, and then prove that their adviser was an accomplice in that fraud. “That’s very difficult to do,” said Alain Recoules, tax partner at Paris-based law firm Arsene Taxand.
Article 20 in the government’s draft 2024 budget bill says it would create a specific crime of making available legal, tax, accounting, or financial instruments, or other means whose purpose is to fraudulently deprive the tax authority of a total or partial payment of tax.
The measure will make it easier for authorities to directly investigate and prosecute tax schemes, the government said.
It’s one of several measures targeting tax and social welfare fraud in the draft bill, which the National Assembly finance committee begin debating this week.
Targets Fraud on “Mass Scale”
The crime would be punishable by up to three years in prison and a 250,000 euro fine. That goes up to five years in prison and a 500,000 euro ($530,600) fine if the fraudulent instruments or services are marketed and/or provided via an online communication service.
The text says it targets lawyers, accountants, and other consultants who help clients commit tax fraud.
But Recoules, who noted that lawyers are already prohibited from advertising in France, said he doesn’t think lawyers and accountants are the proposal’s first target.
He said the government was motivated by a scandal earlier this year over a YouTube video. In the video, a person offered to show people how obtain the status of disabled adult to receive French social security benefits.
“He had prepared a kit, with letters you need to send, with instructions on what they should they say, and where to send them. He sold that for a few hundred euros for each kit,” said Recoules.
“I think the government is primarily going after mass fraud schemes like that, targeting thousands, tens of thousands of people. That’s not something a French law firm could do,” he said.
Need For Allies in Parliament
The government, which lacks an absolute majority in Parliament, will have to find allies in other parties to get the measure passed.
It will need to convince them that it’s a good tool for fighting tax and social welfare fraud. For starters, the proposal needs a good rewrite, said Recoules.
But the proposal’s biggest risk of rejection is by the Constitutional Council, which vets new French legislation.
“To prove that someone incited others to tax fraud, you have to clearly define tax fraud. This proposal doesn’t do that at all, and that would have to be fixed in Parliament for it to have a chance to get past the Constitutional Council,” he said.
The measure faces a first vote in the National Assembly later in the month.