Failing to Declare IFI: A Costly Mistake for International Property Owners in France

What Happens If You Don’t Declare IFI?

Risks and Penalties Explained

 

Understanding Your Obligations Under the French Wealth Tax

 

The Impôt sur la Fortune Immobilière (IFI) — or French Wealth Tax — applies to individuals whose French real estate assets exceed €1.3 million in net taxable value as of January 1 of each year.

 

This tax concerns both residents and non-residents, including foreign investors who hold French property directly or through companies, trusts, or other entities.

 

Many non-residents mistakenly believe they are exempt because they live abroad or own property through an offshore company. Unfortunately, this misunderstanding can lead to serious financial and legal consequences.

 

 Who Is Required to Declare IFI?

 

Under French tax law, any individual — resident or non-resident — who owns real estate in France is potentially subject to IFI.

 

Non-Residents Owning Property in France

 

If you are a non-resident and the net taxable value of your French property exceeds €1.3 million as of January 1, you must file an IFI declaration.

 

Taxable assets include:

 

·      Directly owned properties (residential, rental, or vacant).

·      Shares in companies or entities or holding companies) that own French real estate.

·      Real estate held indirectly through trusts or foreign vehicles.

 

Filing Requirements

 

Your IFI declaration must be filed together with your annual French income tax return, even if you have no rental income. The declaration must detail your assets, liabilities, and any applicable exemptions.

 

Consequences of Non-Compliance

 

Failure to file, late filing, or underreporting may lead to:

 

·      Late payment interest of 0.20% per month (2.4% per year).

·      Penalties up to 80% in cases of deliberate omission or fraud.

·      Tax audits covering up to six years of past declarations.

 

The French tax administration (DGFiP) increasingly relies on international data exchange agreements to identify undeclared foreign-owned assets.

 

What Happens If You Don’t Declare Your IFI?

 

Failing to declare IFI is considered tax non-compliance under French law. The Direction Générale des Finances Publiques (DGFiP) may take extensive corrective and punitive measures.

 

Tax Reassessment

 

The DGFiP may reassess your tax liability for up to six years, recalculating your taxable base and claiming unpaid IFI with surcharges.

 

Late Payment Interest

 

Unpaid amounts accrue interest at 0.20% per month (2.4% per year) from the original due date until payment.

 

Financial Penalties

 

Depending on the degree of intent:

 

·      10% for simple negligence;

·      40% for intentional omission (manquement délibéré);

·      80% for fraud or deliberate concealment.

 

These penalties may combine with interest, substantially increasing total liability.

 

Tax Audit and Investigation

 

In serious cases, the DGFiP may launch an IFI audit, reviewing:

 

·      Ownership structures (SCI, holdings, or trusts).

·      Financing and acquisition methods.

·      Cross-border transactions and foreign bank accounts.

 

French authorities can request information through international cooperation frameworks such as

 

·      [OECD CRS] (https://www.oecd.org/tax/automatic-exchange/common-reporting-standard/)

·      and [FATCA] (https://www.irs.gov/businesses/corporations/foreign-account-tax-compliance-act-fatca).

 

 5. Criminal Sanctions

 

If the omission is deemed deliberate, the DGFiP may refer the case to the Public Prosecutor for fraude fiscale.

Sanctions can include:

 

·      Fines up to €3,000,000, and

·      Up to seven years of imprisonment, particularly when involving complex international structures.

 

Examples of Risky Situations

 

Even seemingly compliant taxpayers can face reassessment in the following scenarios:

 

·      Holding property through foreign companies (e.g., in Luxembourg or the BVI) without transparent disclosure.

·      Deducting non-eligible debts, such as shareholder loans.

·      Transferring assets to family members or trusts without declaring beneficial ownership.

 

In these cases, the DGFiP may “look through” corporate or fiduciary structures to identify the true owner and impose retroactive IFI.

 

 The Consequences of a Tax Audit

 

A tax audit (contrôle fiscal) is one of the most serious procedures initiated by the DGFiP. When undeclared or undervalued assets are suspected, the authorities may demand extensive documentation, including:

 

·      Ownership records (company bylaws, shareholding charts, property deeds).

·      Loan agreements and bank statements.

·      Proof of residence and management control for foreign entities.

 

If discrepancies are identified, the administration will issue a proposed reassessment (Proposition de rectification). You have 30 days to respond, or 60 days upon request, ideally with the assistance of a French tax lawyer to contest or negotiate the adjustment.

 

If no resolution is reached, the matter may escalate to tax mediation or the administrative courts.

 

 How to Regularize Your Situation

 

If you have failed to declare your IFI, the best approach is to voluntarily regularize your situation before any audit begins. This demonstrates good faith and often results in reduced penalties.

 

A qualified French tax and business lawyer can help you:

 

·      Accurately calculate your IFI liability and applicable deductions;

·      Prepare a voluntary disclosure file supported by documentation;

·      Negotiate reduced penalties with the DGFiP;

·      Ensure future compliance and optimize your asset structure.

 

Voluntary regularization can also serve as an opportunity to restructure holdings, improve transparency, and secure long-term peace of mind.

 

 How to Prevent Future Issues

 

To avoid future penalties and audits:

 

·      Assess your IFI exposure annually, especially if property values increase.

·      Review ownership structures to ensure compliance with anti-abuse rules.

·      Seek legal guidance from a French tax lawyer to ensure accurate filings and maximize legitimate deductions.

 

While legal tax optimization is allowed, non-declaration is never safe. Proactive compliance remains your best protection.

 

Conclusion: Transparency Is Your Best Protection

 

Failing to declare IFI can have serious financial and criminal consequences, even for non-residents. In today’s world of global tax transparency, France exchanges property and financial data with over 100 countries.

 

If your French real estate exceeds €1.3 million, it is crucial to act now, not to wait for an audit.

Transparent and well-advised compliance remains the most effective safeguard.

 

Contact Sassi Law Firm

 

If you are a non-resident owning French property and unsure about your IFI obligations, contact Sassi Law Firm for a confidential consultation.

 

We assist foreign investors and high-net-worth individuals in regularizing, defending, and optimizing their French wealth tax situation.

 

Expertise of Sassi Law Firm – Paris

For over 25 years, our practice — composed of attorneys specializing in Tax, Corporate, and Financial Criminal Law — has assisted international clients, corporations, and high-net-worth individuals in addressing complex issues related to French wealth taxation, cross-border investments, and international compliance.

Our firm advises both residents and non-residents on all aspects of the Impôt sur la Fortune Immobilière (IFI), commonly known as the French Wealth Tax, including asset valuation, declaration requirements, and strategies for legal optimization and regularization.

---

Areas of Intervention

Our legal professionals are actively involved in matters covering:

• Wealth tax compliance (IFI): asset valuation, declaration, and audit defense.
• International structuring: ownership through French or foreign companies (SCI, holding entities, or trusts).
• Tax audits and investigations: representation before the Direction Générale des Finances Publiques (DGFiP) and French tax courts.
• Voluntary disclosures and tax regularizations, particularly for undeclared real estate holdings.
• Financial and corporate criminal law, including tax fraud, money laundering, and unlawful asset transfers.

Our team regularly assists during urgent proceedings such as tax investigations, seizures, account freezes, and international information requests, ensuring efficient protection of our clients’ rights and interests.

---

Reputation and Media Presence

The long-standing experience of Mabrouk Sassi, attorney registered with the Paris Bar, in the field of tax and financial criminal law has earned the firm a solid reputation within the business community.

Mr. Sassi has been regularly featured in major media outlets, including L’Express, Les Échos, L’Expansion, L’Entreprise, and BFM Business, where he provides expert commentary on tax and financial legal issues.

---

An International Practice

Our clients include companies, family offices, and individuals located across Europe, the Middle East, Asia, North America, and Africa.

We provide legal assistance for:

• French wealth tax compliance for non-residents owning real estate in France;
• Cross-border investments involving France and offshore jurisdictions;
• Tax optimization and anti-abuse risk management under OECD and EU frameworks.

The firm also represents clients before French administrative and criminal courts for matters related to IFI reassessments, asset concealment allegations, or fraud proceedings.

---

Contact

Mabrouk Sassi, Attorney at Law – Paris Bar (France)

Sassi Law Firm

32 avenue Carnot – 75017 Paris – France

infos@sassi-avocats.com

+33 7 71 58 58 58

www.sassi-avocats.com

---

Useful Links

• General Tax Code (Code Général des Impôts – CGI)
• Legifrance – Official French Legal Database
• Doctrine of the French Tax Administration (BOFiP-Impôts)
• Official website of the French Tax Administration – impots.gouv.fr
• Ministry of Economy, Finance and Industrial and Digital Sovereignty